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What's in the Offing for Alphabet's (GOOGL) Q2 Earnings?

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Alphabet Inc. (GOOGL - Free Report) is scheduled to report second-quarter 2019 results on Jul 25.

Notably, the stock outperformed the Zacks Consensus Estimate in all the trailing four quarters, with the average being 19.02%.

In the last reported quarter, it delivered a positive earnings surprise of 12.58%. First-quarter earnings of $11.90 per share decreased 6.8% sequentially and 19.8% year over year.

The Zacks Consensus Estimate for second-quarter earnings and net revenues is pegged at $11.48 per share and 30.90 billion, respectively.

Coming to price performance, the company’s shares have lost 6.6% in the past year compared with its industry’s decline of 25.2%.

Let’s see how things are shaping up for this announcement.

Alphabet Inc. Price and EPS Surprise

 

Alphabet Inc. Price and EPS Surprise

Alphabet Inc. price-eps-surprise | Alphabet Inc. Quote

Search, Waymo Initiatives & Cloud Momentum to Aid Growth

Alphabet’s dominant position in the search world is anticipated to be a key catalyst for top-line growth.

The company’s continued focus on innovation of the search segment, which accounts for a major portion of total revenues, will likely enhance the segment’s results and drive traffic on its platform.

Google has been significantly gaining momentum in the highly-competitive cloud market over the last few quarters. Recently, it has expanded the cloud service portfolio and data centers, which is a positive for the upcoming results.

The company’s growing autonomous driving initiatives are likely to aid Alphabet in the to-be-reported quarter. In this regard, its self-driving unit Waymo launched ad-free music streaming for passengers through Google Play Music in late April. Such services are going to aid revenue generation, which will in turn drive top-line growth.

Concerns

Alphabet’s search advertising business is facing stiff competition from Amazon. Google Cloud trails both Amazon and Microsoft in the cloud computing space. Increasing competition in both the markets is likely to hurtits top-line growth in the to-be-reported quarter.

The company continues to face data privacy challenges, which remain a major concern. In addition, increased spending on its consumer gadgets, YouTube video app and cloud computing services poses risks.

What Our Model Says

According to the Zacks model, a company with a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) has a good chance of beating estimates if it also has a positive Earnings ESP. The Sell-rated stocks (Zacks Rank #4 or 5) are best avoided.You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

Alphabet currently has a Zacks Rank #4 and an Earnings ESP of -1.70%, which makes surprise prediction difficult.

Stocks That Warrant a Look

You may consider the following stocks with a positive Earnings ESP and a favorable Zacks Rank.

Amazon.com, Inc. (AMZN - Free Report) has an Earnings ESP of +15.56% and carries a Zacks Rank #1. You can see the complete list of today’s Zacks #1 Rank stocks here.

Facebook, Inc. has an Earnings ESP of +0.61% and a Zacks Rank #2.

Thermo Fisher Scientific Inc. (TMO - Free Report) has an Earnings ESP of +0.54% and holds a Zacks Rank #2.

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