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Alphabet(Google) Graham Number

: $46.13 (As of Jun. 2022)
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Graham Number is a figure that measures a stock's fundamental value by taking into account the company's earnings per share and book value per share. The Graham number is the upper bound of the price range that a defensive investor should pay for the stock. According to the theory, any stock price below the Graham number is considered undervalued, and thus worth investing in.

As of today (2022-08-13), the stock price of Alphabet(Google) is $121.68. Alphabet(Google)'s graham number for the quarter that ended in Jun. 2022 was $46.13. Therefore, Alphabet(Google)'s Price to Graham Number ratio for today is 2.64.

The historical rank and industry rank for Alphabet(Google)'s Graham Number or its related term are showing as below:

GOOGL' s Price-to-Graham-Number Range Over the Past 10 Years
Min: 1.18   Med: 2.43   Max: 7.42
Current: 2.64

During the past 13 years, the highest Price to Graham Number ratio of Alphabet(Google) was 7.42. The lowest was 1.18. And the median was 2.43.

GOOGL's Price-to-Graham-Number is ranked worse than
69.34% of 274 companies
in the Interactive Media industry
Industry Median: 1.75 vs GOOGL: 2.64

Graham Number is a combination of asset valuation and earnings power valuation. It is a very conservative way of valuing a stock.


Alphabet(Google) Graham Number Historical Data

The historical data trend for Alphabet(Google)'s Graham Number can be seen below:

* For Operating Data section: All numbers are indicated by the unit behind each term and all currency related amount are in USD.
* For other sections: All numbers are in millions except for per share data, ratio, and percentage. All currency related amount are indicated in the company's associated stock exchange currency.

* Premium members only.

Alphabet(Google) Annual Data
Trend Dec12 Dec13 Dec14 Dec15 Dec16 Dec17 Dec18 Dec19 Dec20 Dec21
Graham Number
Premium Member Only Premium Member Only Premium Member Only Premium Member Only Premium Member Only 13.93 23.59 26.80 31.25 46.54

Alphabet(Google) Quarterly Data
Sep17 Dec17 Mar18 Jun18 Sep18 Dec18 Mar19 Jun19 Sep19 Dec19 Mar20 Jun20 Sep20 Dec20 Mar21 Jun21 Sep21 Dec21 Mar22 Jun22
Graham Number Premium Member Only Premium Member Only Premium Member Only Premium Member Only Premium Member Only Premium Member Only Premium Member Only Premium Member Only Premium Member Only Premium Member Only Premium Member Only Premium Member Only Premium Member Only Premium Member Only Premium Member Only 40.73 44.00 46.54 46.56 46.13

Competitive Comparison

For the Internet Content & Information subindustry, Alphabet(Google)'s Graham Number, along with its competitors' market caps and Graham Number data, can be viewed below:

* Competitive companies are chosen from companies within the same industry, with headquarter located in same country, with closest market capitalization; x-axis shows the market cap, and y-axis shows the term value; the bigger the dot, the larger the market cap. Note that "N/A" values will not show up in the chart.

   

Alphabet(Google) Graham Number Distribution

For the Interactive Media industry and Communication Services sector, Alphabet(Google)'s Graham Number distribution charts can be found below:

* The bar in red indicates where Alphabet(Google)'s Graham Number falls into.



Alphabet(Google) Graham Number Calculation

Graham Number is a concept based on Ben Graham's conservative valuation of companies.

Alphabet(Google)'s Graham Number for the fiscal year that ended in Dec. 2021 is calculated as

Graham Number
=sqrt of (22.5* Tangible Book per Share *EPS without NRI)
=sqrt of (22.5*17.162*5.61)
=46.54

Alphabet(Google)'s Graham Number for the quarter that ended in Jun. 2022 is calculated as

Graham Number
=sqrt of (22.5*Tangible Book per Share*EPS without NRI (TTM))
=sqrt of (22.5*17.594*5.376)
=46.13

* For Operating Data section: All numbers are indicated by the unit behind each term and all currency related amount are in USD.
* For other sections: All numbers are in millions except for per share data, ratio, and percentage. All currency related amount are indicated in the company's associated stock exchange currency.


Alphabet(Google)  (NAS:GOOGL) Graham Number Explanation

Ben Graham actually did not publish a formula like this. But he wrote in The Intelligent Investor (1948 version) regarding to the criteria for purchases:

Current price should not be more than 15 times average earnings of the past three years.

Current price should not be more than 1.5 times the book value last reported. However, a multiplier of earnings below 15 could justify a correspondingly higher multiplier of assets. As a rule of thumb we suggest that the product of the multiplier times the ratio of price to book value should not exceed 22.5. (This figure corresponds to 15 times earnings and 1.5 times book value. It would admit an issue selling at only 9 times earnings and 2.5 times asset value, etc.)

Unlike valuation methods such as DCF or Discounted Earnings, the Graham number does not take growth into the valuation. Unlike the valuation methods based on book value alone, it takes into account the earnings power. Therefore, the Graham Number is a combination of asset valuation and earnings power valuation.

In general, the Graham number is a very conservative way of valuing a stock. It cannot be applied to companies with negative book values.

Alphabet(Google)'s Price to Graham number Ratio for today is calculated as

Price to Graham number=Share Price (Today)/Graham number (Q: Jun. 2022 )
=121.68/46.13
=2.64

* For Operating Data section: All numbers are indicated by the unit behind each term and all currency related amount are in USD.
* For other sections: All numbers are in millions except for per share data, ratio, and percentage. All currency related amount are indicated in the company's associated stock exchange currency.


Be Aware

Please keep these in mind:

1. Graham Number does not take growth into account. Therefore it underestimates the values of the companies that have good earnings growth. We feel that if the earnings per share grows more than 10% a year, Graham Number underestimates the value.
2. Graham Number punishes the companies that have temporarily low earnings. Therefore, an average of earnings makes more sense in the calculation of Graham Number.
3. Graham Numbers underestimates companies that are light with book.


Alphabet(Google) Graham Number Related Terms

Thank you for viewing the detailed overview of Alphabet(Google)'s Graham Number provided by GuruFocus.com. Please click on the following links to see related term pages.


Alphabet(Google) Business Description

Alphabet(Google) logo
Address
1600 Amphitheatre Parkway, Mountain View, CA, USA, 94043
Alphabet Inc is a holding company, with Google, the Internet media giant, as a wholly owned subsidiary. Google generates 99% of Alphabet revenue, of which more than 85% is from online ads. Google's other revenue is from sales of apps and content on Google Play and YouTube, as well as cloud service fees and other licensing revenue. Sales of hardware such as Chromebooks, the Pixel smartphone, and smart homes products, which include Nest and Google Home, also contribute to other revenue. Alphabet's moonshot investments are in its other bets segment, where it bets on technology to enhance health (Verily), faster Internet access to homes (Google Fiber), self-driving cars (Waymo), and more. Alphabet's operating margin has been 25%-30%, with Google at 30% and other bets operating at a loss.
Executives
Schindler Philipp officer: SVP, Chief Business Officer C/O ALPHABET INC. 1600 AMPHITHEATRE PKWY MOUNTAIN VIEW CA 94568
Walker John Kent officer: SVP, Global Affairs and CLO 1600 AMPHITHEATRE PRKW MOUNTAIN VIEW CA 94043
Raghavan Prabhakar officer: Senior Vice President C/O ALPHABET INC., 1600 AMPHITHEATRE PKWY MOUNTAIN VIEW CA 94043
Arnold Frances director 5200 ILLUMINA WAY SAN DIEGO CA 92122
Washington Robin L director 333 LAKESIDE DRIVE FOSTER CITY CA 94404
O'toole Amie Thuener officer: VP, Chief Accounting Officer C/O ALPHABET INC. 1600 AMPHITHEATRE PKWY MOUNTAIN VIEW CA 94043
Lee Antonio 10 percent owner, other: Investor/Large Shareholder 4009 216TH STREET MATTESON IL 60443
Ferguson Roger W. Jr. director CORNING INCORPORATED ONE RIVERFRONT PLAZA CORNING NY 14831
Campbell James Grier officer: VP, Alphabet Corp. Controller 1600 AMPHITHEATRE PKWY MOUNTAIN VIEW CA 94043
Hennessy John L director
Mulally Alan R director P.O. BOX 995 MERCER ISLAND WA 98040
Shriram Kavitark Ram director 1600 AMPHITHEATRE PARKWAY MOUNTAIN VIEW CA 94043
Mather Ann director
Tilghman Shirley M director GOOGLE INC. 1600 AMPHITHEATRE PARKWAY MOUNTAIN VIEW CA 94043
Otellini Paul S director 2200 MISSION COLLEGE BLVD RNB-4-151 SANTA CLARA CA 95054

Alphabet(Google) Headlines

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