Alphabet Shares, NASDAQ: GOOGL, GOOG, Trade At Fresh All-Time Highs On Earnings
Joining Microsoft Corporation (NASDAQ: MSFT) and Amazon.com, Inc. (NASDAQ: AMZN) at new highs in the after-hours this evening was Alphabet (NASDAQ: GOOG, GOOGL), the company formerly known as Google. The results reported today represented the last results of the company operating under the Google name. Going forward, from October 1, the company is officially known as Alphabet Inc.
Alphabet reported earnings per share of $7.35 in its third quarter 2015 financial results after the close of the NASDAQ at 4 p.m. today. The Wall Street analyst consensus estimate, made up by taking the average estimate of the 40 research firms that published EPS estimates, was $7.21. Alphabet’s $7.35 beats this number by 1.9 percent.
The consensus estimate for Alphabet revenues was $18.5 billion. The tech giant reported $18.7 billion. The figure represents year over year sales growth of 13 percent.
GOOG shares give holders no voting rights, explaining why they are trading at $721.84 in the after-hours compared with $742.80 for GOOGL shares, which carry voting rights, according to Investopedia. The market puts a premium on the voting privileges of GOOGL shareholders.
In percentage terms, each tends to follow the other closely, though GOOGL shares seem to outperform. For example, over the past year GOOG shares have gained 21.08 percent, while GOOGL shares have gained 24.09 percent. The GOOGL shares have outperformed the GOOG shares by a noteworthy difference. Over the same period, the Dow Jones Industrial Average has only returned 4.07 percent. GOOG and GOOGL shares have both markedly outperformed the broad market.
“Institutional investors with the buying power to move stocks like GOOG 14 percent only do so when they expect to make money on their investment,” the Inquisitr wrote with regard to the breakaway gap drawn on stock charts by then-Google’s shares. Almost exactly three months later, shares are gapping out again, at a level 11 percent above where the last breakaway occurred.
Going into the report, Wall Street analysts were looking for GOOGL EPS growth of 19.5 percent for the fourth quarter of 2015 and 14.7 percent for the full year. The consensus is for GOOGL EPS growth of 16.9 percent in 2016 and 16.5 percent annually between 2016 and 2020.
For a company with a market capitalization of close to $500 billion, Alphabet carries a markedly small amount of debt. Going into today’s report, Alphabet reported $7.93 billion in debt and a 7.1 percent debt to equity ratio. Alphabet also carried $69.6 billion in cash. Alphabet sported a healthy profit margin of 21.8 percent and an operating margin of 25.5 percent. Alphabet last reported a return on equity of 13.7 percent.
Other NASDAQ stocks, Amazon and Microsoft, carry higher levels of debt than Alphabet, as reported by the Inquisitr. Of the three companies, Amazon carries the most debt, but it also effectively uses the debt, enabling it to report the highest EPS growth of the three. GOOGL shares are up 24.1 percent over the past 12 months compared with AMZN shares, which are up 96.4 percent. Amazon has been masterfully using the low interest rate environment to borrow and effectively use the capital to grow earnings like few companies with roughly $300 billion in market capitalization could.
Revisions to analysts’ estimates for GOOG and GOOGL shares are likely.
[Feature Photo by Mike Windle/Getty Images for Google]
