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Alphabet (GOOGL) to Report Q2 Earnings: What's in the Cards?

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Alphabet (GOOGL - Free Report) is scheduled to report second-quarter 2021 results on Jul 27.

For the quarter under review, the Zacks Consensus Estimate for revenues is pegged at $46.1 billion, indicating an improvement of 45.8% from the year-ago reported number.

Further, the consensus mark for earnings is pegged at $19.89, indicating a 96.3% rise from the previous year’s reported figure. Notably, the figure has moved upward 1.2% over the past 7 days.

The company surpassed the Zacks Consensus Estimate in all the trailing four quarters, delivering an earnings surprise of 43.02%, on average.

Alphabet Inc. Price and EPS Surprise

 

Alphabet Inc. Price and EPS Surprise

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

Search, Ad & Cloud Momentum to Aid Growth

Alphabet’s dominant position in the search world remains the key catalyst for the company’s top-line growth. Its expanding ad services portfolio, robust search engine and improving search results are likely to have benefited the second-quarter performance.

The company’s continued efforts toward innovation of its search segment, which accounts for the major portion of the total revenues, is expected to have continued driving traffic on its platform in the second quarter.

The growing momentum across its mobile search is anticipated to have been another positive. The company’s strength across retail, technology and CPG categories is expected to have driven growth in search revenues from Google-owned sites in the to-be-reported quarter.

Apart from this, Google has been gaining traction with the Local Services ads. This is expected to get reflected in its second-quarter advertisement revenues.

Coming to cloud prospects, Google has been significantly gaining momentum in the highly competitive cloud market on the back of its expanding cloud services portfolio and anincreasing number of data centers. The impacts of this are expected to get reflected in the company’s cloud second-quarter revenues.

The solid adoption of G Suit offerings is likely to have contributed well to the performance of the Google Cloud segment in the to-be-reported quarter.

Android, Payment, Waymo & Healthcare Efforts to Consider

Google’s strength across Android, digital payment, autonomous driving and healthcare is anticipated to have aided its second-quarter performance.

Google recently introduced Android features — end-to-end encryption and Starred message features for its Messages application. These are likely to have helped it in delivering an enhanced user experience.

The addition of the voice recognition feature to open Android applications and the unveiling of Android Auto are expected to have driven the company’s momentum among the Android user base in the quarter-to-be-reported.

The strengthening adoption of Google Pay and its expanding global footprint are expected to get reflected in the second-quarter revenues of the company.

Growing prospects around Alphabet’s self-driving unit —Waymo— are expected to have been a major tailwind. In the quarter under review, Waymo raised $2.5 billion in a fresh funding round, which increased its inflow of resources from external investors.

Waymo teamed up with Google’s Maps to ensure a seamless booking experience for its autonomous ride-hailing service called Waymo One. All these are expected to have contributed to Waymo’s performance in the to-be-reported quarter.

Apart from this, Alphabet’s initiatives to bolster its footprint in the healthcare industry are expected to have been positives. In this regard, Google’srecent multi-year partnership with the national hospital chain, HCA Healthcare, to bring advancement in clinical decision-making is anticipated to have contributed well. The well-performing life science division, Verily, and its winning healthcare projects are likely to have acted as tailwinds.

What Our Model Says

Our proven model conclusively predicts an earnings beat for Alphabet this time around. The combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) increases the odds of an earnings beat. But that’s not the case here. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

Alphabet has an Earnings ESP of +7.01% and a Zacks Rank #3 at present.

Other Stocks to Consider

Here are someother stocks that you may consider as our model shows that these too have the right combination of elements to beat on earnings this season.

Garmin Ltd. (GRMN - Free Report) has an Earnings ESP of +4.54% and a Zacks Rank of 2, currently. You can see the complete list of today’s Zacks #1 Rank stocks here.

Carrier Global Corporation (CARR - Free Report) has an Earnings ESP of +1.45% and a Zacks Rank of 2, currently.

Waters Corporation (WAT - Free Report) has an Earnings ESP of +2.71% and a Zacks Rank of 3 at present.