Today is Thursday, July 9, 2020, and we’re looking at the recent performance of Alphabet stock (NASDAQ: GOOG). What caused its price movements over the last month? And what do its prospects look like going forward? Let’s find out…
About Alphabet
Alphabet 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. It currently has a market capitalization of $1.031 trillion.
Alphabet’s Price Movements
Alphabet shares rose 3.41% in the last month because the company has expanded its gaming and cloud services footprints – two segments of the information technology sector which have benefitted from COVID-19-related lockdowns.
With these recent price movements in mind, let’s see how expensive Alphabet is relative to its peers.
Alphabet’s Valuation Today
The company’s price-to-earnings (P/E) ratio of 30.47 is 3.21% lower than its industry average of 31.48. That’s good.
A company’s P/E ratio shows its price as a multiple of its earnings per share (EPS). A relatively low P/E ratio is generally an indicator that a company is undervalued, while a relatively high P/E ratio is generally an indicator that a company is overvalued.
But valuation metrics like P/E never stay static for long. They’re especially affected by earnings reports…
Alphabet’s Near-Future Prospects
Alphabet’s next quarterly earnings report is expected on Friday, July 24, 2020. It’s worth watching what that next quarterly earnings report will do to the company’s price and valuation.
The Takeaway
In summary, recent events have pushed Alphabet shares up in the last month. They’re now undervalued relative to peer companies on a P/E basis – but that could change when the company releases earnings in July.
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