Have you been paying attention to shares of Alphabet (
GOOG Quick Quote GOOG - Free Report) ? Shares have been on the move with the stock up 4.8% over the past month. The stock hit a new 52-week high of $2670.09 in the previous session. Alphabet has gained 52.2% since the start of the year compared to the 19.2% move for the Zacks Computer and Technology sector and the 37.1% return for the Zacks Internet - Services industry. What's Driving the Outperformance?
The stock has a great record of positive earnings surprises, as it hasn't missed our earnings consensus estimate in any of the last four quarters. In its last earnings report on April 27, 2021, Alphabet Inc. reported EPS of $26.29 versus consensus estimate of $15.66.
For the current fiscal year, Alphabet Inc. is expected to post earnings of $90.17 per share on $193.83 billion in revenues. This represents a 53.85% change in EPS on a 29.43% change in revenues. For the next fiscal year, the company is expected to earn $98.29 per share on $226.42 billion in revenues. This represents a year-over-year change of 9.01% and 16.82%, respectively.
Alphabet Inc. may be at a 52-week high right now, but what might the future hold for the stock? A key aspect of this question is taking a look at valuation metrics in order to determine if the company is due for a pullback from this level.
On this front, we can look at the Zacks Style Scores, as these give investors a variety of ways to comb through stocks (beyond looking at the Zacks Rank of a security). These styles are represented by grades running from A to F in the categories of Value, Growth, and Momentum, while there is a combined VGM Score as well. Investors should consider the style scores a valuable tool that can help you to pick the most appropriate Zacks Rank stocks based on their individual investment style.
Alphabet Inc. has a Value Score of D. The stock's Growth and Momentum Scores are A and A, respectively, giving the company a VGM Score of B.
In terms of its value breakdown, the stock currently trades at 29.6X current fiscal year EPS estimates. On a trailing cash flow basis, the stock currently trades at 33.3X versus its peer group's average of 18.1X. Additionally, the stock has a PEG ratio of 1.63. This isn't enough to put the company in the top echelon of all stocks we cover from a value perspective.
We also need to consider the stock's Zacks Rank, as this supersedes any trend on the style score front. Fortunately, Alphabet Inc. currently has a Zacks Rank of #2 (Buy) thanks to rising earnings estimates.
Since we recommend that investors select stocks carrying Zacks Rank of 1 (Strong Buy) or 2 (Buy) and Style Scores of A or B, it looks as if Alphabet Inc. passes the test. Thus, it seems as though Alphabet Inc. shares could have potential in the weeks and months to come.
How Does Alphabet Inc. Stack Up to the Competition?
Shares of Alphabet Inc. have been moving higher, and the company still appears to be a decent choice, but what about the rest of the industry? Some of its industry peers are also solid potential picks, including Internet Initiative Japan (
IIJIY Quick Quote IIJIY - Free Report) , Alphabet ( GOOG Quick Quote GOOG - Free Report) , and CACI International ( CACI Quick Quote CACI - Free Report) , all of which currently have a Zacks Rank of at least #2 and a VGM Score of at least B, making them well-rounded choices.
However, it is worth noting that the Zacks Industry Rank for this group is in the bottom half of the ranking, so it isn't all good news for Alphabet Inc. Still, the fundamentals for Alphabet Inc. are promising, and it still has potential despite being at a 52-week high.