If you were invested in Google (GOOGL) a year back, you would have been sitting on a return of 28.6%. In fact, its share price has increased 7% since the beginning of the year. This company has been a great player and is filling the investors’ coffers. Hence, it is one of the favorite picks of investors. But in order to make more money, one needs to know about its future. The global technology company will be reporting its second quarter results this week. Let us look at it in details.
What analysts expect?
The technology giant is expected to report overall revenue of 15.62 billion, a surge of 10.8% over last year. That’s an impressive jump expected from Google. Also, earnings are estimated to be at $6.25 per share from $4.78 per share in the prior year. However, it has missed on the analysts’ earnings expectations in the last two quarters. Also, it could manage to beat the expectations in only one quarter, out of last 4 quarters. Does that mean that the technology company is going to miss it once again?
Not really. Google has pulled up its sleeve and has undertaken a host of strategies to give a boost to its growing business. One of its most important efforts is that of extending the use of Android to TVs, wearables and cars. Therefore, Android will not be limited to smartphones only. It means that Android platform is being extended to TVs through Android TV. This will enable it to differentiate itself from other competitors such as Amazon and Apple. Also, Android Auto will provide tough competition to Apple’s CarPlay.
It is also working towards adoption of smartphones in the developing countries, so that it can add another billion to the existing 1 billion active users of Google. In fact, the company plans to launch a range of sub-$100 smartphones in the coming months. These phones are particularly targeted to the developing markets such as India. This will be launched after the Apple iPhone 6 is released. On one hand, the iPhone is targeted to the affluent class, and on the other hand, the new cheap phone will be for the rest of the world.
The PE multiple for Google stands at 22.2, whereas the industry ratio is -2.28. This highlights the company’s ability to outperform the industry. Further, Google’s PEG ratio is lower, at 1.39, as compared to the industry metric of 1.48. Hence, investors should expect growth from this company.
Further, the tech giant has made a number of acquisitions in order to strengthen its business even more. It acquired Quest Visual and Enterproid in May this year. Also, it acquired mDialog Corp. and Appurify Inc. in the last month itself. Appurify is a developer of mobile bugging application software. Hence, these buyouts would again give Google an added advantage over its industry peers.
Google is the leader in mobile search engine market and derives 29% of its revenue from this segment. In fact, it has a market share of 90% in this space. Further, with the growth of the Android platform, which is expected to reach 80% of market share by the end of this year, Google will have a brighter future. Also, the company is the market leader in video content, through YouTube, which makes 8% of its revenue. With the growing user count on these search engines, Google is set to have a better growth. Investors should be watching this company closely.