We use cookies to understand how you use our site and to improve your experience. This includes personalizing content and advertising. To learn more, click here. By continuing to use our site, you accept our use of cookies, revised Privacy Policy and Terms of Service.
You are being directed to ZacksTrade, a division of LBMZ Securities and licensed broker-dealer. ZacksTrade and Zacks.com are separate companies. The web link between the two companies is not a solicitation or offer to invest in a particular security or type of security. ZacksTrade does not endorse or adopt any particular investment strategy, any analyst opinion/rating/report or any approach to evaluating individual securities.
If you wish to go to ZacksTrade, click OK. If you do not, click Cancel.
The Zacks Analyst Blog Highlights: Alphabet, Facebook, Amazon and Apple
Read MoreHide Full Article
For Immediate Release
Chicago, IL –February 6, 2019 – Zacks.com announces the list of stocks featured in the Analyst Blog. Every day the Zacks Equity Research analysts discuss the latest news and events impacting stocks and the financial markets. Stocks recently featured in the blog include: Alphabet (GOOGL - Free Report) ,Facebook , Amazon (AMZN - Free Report) and Apple (AAPL - Free Report) .
Alphabet had a very decent quarter that investors refused to react to in any material way. True, shares did fall off in extended trading, but that was more of a sounding that the company has to do more to court investors.
It just isn’t enough that revenues were about 2% ahead of the Zacks Consensus Estimate or that earnings were more than 15% ahead. Or that the decline in cost per click on Google properties of 29% was no match for the 66% increase in the number of paid clicks. There was also little appreciation for the 7% increase in impressions on network members’ properties that was accompanied by a 5% increase in the cost per impression.
So why are prices down?
Given Alphabet’s size, it’s kind of hard to think of it as a growth company, particularly because of the considerable uncertainties in the current environment. So investors aren’t taking the company’s huge investments very well.
And if you back out the $5.70 positive impact on the EPS from the adoption of ASU 2016-01, EPS for the quarter comes to $7.07, a 27% decline from last year, reflecting the significant increase in operating expenses that shaved nearly three points off the operating margin.
Those expenses were attributed to content licensing for YouTube and headcount and other cost increases for data center and hardware. Things like data center investment show up as big costs while capacity is built out and it’s only later, as the capacity fills up, that you see the margin climb back up again.
To make matters worse, Google doesn’t say what it earns from these businesses: all we know is that its “other” revenue is up nearly 31% from a year ago. Not bad at all.
CFO Ruth Porat told Bloomberg TV that the 64% increase in capex “reflects our outlook for global growth in ads, search, YouTube and cloud." The company still managed to generate $5.91 billion in free cash flow, which is almost level with the year-ago quarter’s $5.96 billion.
Conclusion
This is a company with considerable growth potential folks. It’s got the deep deep pockets to go on investing for a really long time. What’s more, it’s making money hand over fist and there’s no sign of it stopping any time soon. So let the Facebooks and Amazons of the world put up some competition. Or an Apple do a temporary block on it. All this will only make the ride more interesting, creating more opportunities to accumulate.
As far as valuation is concerned, the stock is off its 5-year median by 5.2% based on forward 12 months’ earnings, more than the S&P 500’s 4.9%. So any weakness in the share price is a great entry point and there will be a bounce back as reality checks in.
That’s why there’s currently a Zacks Rank #2 (Buy) rating on the stock.
Zacks' Top 10 Stocks for 2019
In addition to the stocks discussed above, would you like to know about our 10 finest buy-and-holds for the year?
Who wouldn't? Our annual Top 10s have beaten the market with amazing regularity. In 2018, while the market dropped -5.2%, the portfolio scored well into double-digits overall with individual stocks rising as high as +61.5%. And from 2012-2017, while the market boomed +126.3, Zacks' Top 10s reached an even more sensational +181.9%.
Past performance is no guarantee of future results. Inherent in any investment is the potential for loss. This material is being provided for informational purposes only and nothing herein constitutes investment, legal, accounting or tax advice, or a recommendation to buy, sell or hold a security. No recommendation or advice is being given as to whether any investment is suitable for a particular investor. It should not be assumed that any investments in securities, companies, sectors or markets identified and described were or will be profitable. All information is current as of the date of herein and is subject to change without notice. Any views or opinions expressed may not reflect those of the firm as a whole. Zacks Investment Research does not engage in investment banking, market making or asset management activities of any securities. These returns are from hypothetical portfolios consisting of stocks with Zacks Rank = 1 that were rebalanced monthly with zero transaction costs. These are not the returns of actual portfolios of stocks. The S&P 500 is an unmanaged index. Visit http://www.zacks.com/performance for information about the performance numbers displayed in this press release.
See More Zacks Research for These Tickers
Normally $25 each - click below to receive one report FREE:
Image: Bigstock
The Zacks Analyst Blog Highlights: Alphabet, Facebook, Amazon and Apple
For Immediate Release
Chicago, IL –February 6, 2019 – Zacks.com announces the list of stocks featured in the Analyst Blog. Every day the Zacks Equity Research analysts discuss the latest news and events impacting stocks and the financial markets. Stocks recently featured in the blog include: Alphabet (GOOGL - Free Report) ,Facebook , Amazon (AMZN - Free Report) and Apple (AAPL - Free Report) .
Here are highlights from Tuesday’s Analyst Blog:
Is Alphabet (GOOGL - Free Report) a Buy After Strong Q4 Results
Alphabet had a very decent quarter that investors refused to react to in any material way. True, shares did fall off in extended trading, but that was more of a sounding that the company has to do more to court investors.
It just isn’t enough that revenues were about 2% ahead of the Zacks Consensus Estimate or that earnings were more than 15% ahead. Or that the decline in cost per click on Google properties of 29% was no match for the 66% increase in the number of paid clicks. There was also little appreciation for the 7% increase in impressions on network members’ properties that was accompanied by a 5% increase in the cost per impression.
So why are prices down?
Given Alphabet’s size, it’s kind of hard to think of it as a growth company, particularly because of the considerable uncertainties in the current environment. So investors aren’t taking the company’s huge investments very well.
And if you back out the $5.70 positive impact on the EPS from the adoption of ASU 2016-01, EPS for the quarter comes to $7.07, a 27% decline from last year, reflecting the significant increase in operating expenses that shaved nearly three points off the operating margin.
Those expenses were attributed to content licensing for YouTube and headcount and other cost increases for data center and hardware. Things like data center investment show up as big costs while capacity is built out and it’s only later, as the capacity fills up, that you see the margin climb back up again.
To make matters worse, Google doesn’t say what it earns from these businesses: all we know is that its “other” revenue is up nearly 31% from a year ago. Not bad at all.
CFO Ruth Porat told Bloomberg TV that the 64% increase in capex “reflects our outlook for global growth in ads, search, YouTube and cloud." The company still managed to generate $5.91 billion in free cash flow, which is almost level with the year-ago quarter’s $5.96 billion.
Conclusion
This is a company with considerable growth potential folks. It’s got the deep deep pockets to go on investing for a really long time. What’s more, it’s making money hand over fist and there’s no sign of it stopping any time soon. So let the Facebooks and Amazons of the world put up some competition. Or an Apple do a temporary block on it. All this will only make the ride more interesting, creating more opportunities to accumulate.
As far as valuation is concerned, the stock is off its 5-year median by 5.2% based on forward 12 months’ earnings, more than the S&P 500’s 4.9%. So any weakness in the share price is a great entry point and there will be a bounce back as reality checks in.
That’s why there’s currently a Zacks Rank #2 (Buy) rating on the stock.
Zacks' Top 10 Stocks for 2019
In addition to the stocks discussed above, would you like to know about our 10 finest buy-and-holds for the year?
Who wouldn't? Our annual Top 10s have beaten the market with amazing regularity. In 2018, while the market dropped -5.2%, the portfolio scored well into double-digits overall with individual stocks rising as high as +61.5%. And from 2012-2017, while the market boomed +126.3, Zacks' Top 10s reached an even more sensational +181.9%.
See Latest Stocks Today >>
Media Contact
Zacks Investment Research
800-767-3771 ext. 9339
support@zacks.com
http://www.zacks.com
Past performance is no guarantee of future results. Inherent in any investment is the potential for loss. This material is being provided for informational purposes only and nothing herein constitutes investment, legal, accounting or tax advice, or a recommendation to buy, sell or hold a security. No recommendation or advice is being given as to whether any investment is suitable for a particular investor. It should not be assumed that any investments in securities, companies, sectors or markets identified and described were or will be profitable. All information is current as of the date of herein and is subject to change without notice. Any views or opinions expressed may not reflect those of the firm as a whole. Zacks Investment Research does not engage in investment banking, market making or asset management activities of any securities. These returns are from hypothetical portfolios consisting of stocks with Zacks Rank = 1 that were rebalanced monthly with zero transaction costs. These are not the returns of actual portfolios of stocks. The S&P 500 is an unmanaged index. Visit http://www.zacks.com/performance for information about the performance numbers displayed in this press release.