Google (GOOGL, Financial) is progressing in a smart manner to benefit from a number of fast-growing markets. For instance, the enterprise business of Google is performing robustly with more than 60% of the Fortune 500 using its paid products. It added even more like Rockwell Collins during this quarter which signed up 2,000 employees to use Google apps.
Introducing new products for growth
Google also launched Google Drive for work which is a premium service of businesses that includes unlimited storage. The cloud platform business of Google is also gaining momentum with new features announced at IO.
The hardware business of Google also presented exceedingly good results with over 1 million Chromebooks sold into schools. The popularity of Chromecast also continues to grow with present availability in Australia, Korea, Portugal and many more.
Paid clicks for second quarter 2014 increased approximately 25% over the second quarter of 2013 and increased approximately 2% from the first quarter of 2014. Cost per click declined 6% from the previous year. But, that's better than the 9% year-over-year decline for the first quarter of the year.
Google also acquired Titan Aerospace, a drone company, and Skybox Imaging, a satellite service during the year which will help its moonshot type projects and is not believed to affect profitability.
Google introduced a service last year called Enhanced Campaigns which allows marketers to focus more of their spending to wireless devices in order to tap into new sources of revenue. The company is also forcing retailers to spend more on product listings which displays pictures and pricing.
Expert view
TheStreet Ratings team rates Google as a "Hold" with a ratings score of C owing to a mix of strengths and weaknesses. The company’s strengths are seen in multiple areas, like solid revenue growth, robust financial position with reasonably low debt levels by most measures and good valuation levels. Contrasting to these strengths there’re a few weaknesses as well including disappointing performance in the stock itself, poor return on equity and slow growth in the company's earnings per share.
Conclusion
The trailing P/E of 31.18 is reasonably low and indicates the low cost of the stock. The profit margin of 20.29% depicts satisfactory investor profits. The revenue per share and diluted EPS of 97.06 and 19.09, respectively, are impressive and signify robust earnings. The quarterly revenue growth and quarterly earnings growth of 13.10% and 6%, respectively, indicate a satisfactory increase in the earnings of investors. The current ratio of 4.56 is stable and signifies the robustness of the company’s balance sheet. Therefore, the investors are advised to invest into Google and expect promising long-term returns.
