Alphabet (GOOGL) outpaces stock market gains: what you need to know

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Alphabet (GOOGL) closed the last trading day at $2,291.44, moving +1.16% from the previous trading session. The change outpaced the S&P 500’s 0.36% gain on the day. Elsewhere, the Dow Jones gained 0.23%, while the tech-heavy Nasdaq lost 0.1%.

Prior to today’s session, shares of the internet search leader were down 3.32% in the past month. That was narrower than the IT & Technology sector’s 6.98% loss and the S&P 500’s 6.59% loss during that time.

Wall Street will be looking for positivity from Alphabet as it nears its next earnings release date. On that day, Alphabet is expected to report earnings of $26.24 per share, which would represent a 3.74% year-over-year decline. Meanwhile, our latest consensus estimate calls for revenue of $58.01 billion, up 13.85% from the prior year quarter.

For the full year, our Zacks consensus estimates call for earnings of $110.62 per share and revenue of $245.4 billion, which would represent swings of -1.41% and +15, 72%, respectively, compared to the previous year.

It’s also important to note recent changes to analyst estimates for Alphabet. Recent revisions tend to reflect the latest short-term trading trends. Thus, positive revisions to estimates reflect analysts’ optimism about the company’s business and profitability.

Based on our research, we believe that these estimate revisions are directly related to the team’s close stock movements. Investors can take advantage of this by using the Zacks ranking. This model accounts for these estimation changes and provides a simple and actionable scoring system.

The Zacks Rank system, which ranges from #1 (Strong Buy) to #5 (Strong Sell), has an impressive track record of outperformance verified by external audits, with #1 stocks generating an average annual return of +25% since 1988 Over the past 30 days, our consensus EPS projection is down 1.11%. Alphabet currently has a Zacks rank of #4 (sell).

Valuation is also important, so investors should note that Alphabet currently has a Forward P/E ratio of 20.48. Its industry sports an average Forward P/E of 20.54, so we can conclude that Alphabet is trading at a comparative discount.

Additionally, it is worth mentioning that GOOGL has a PEG ratio of 1.11. The PEG ratio is similar to the widely used P/E ratio, but this measure also takes into account the company’s expected earnings growth rate. The Internet – Services sector currently had an average PEG ratio of 1.74 at yesterday’s close.

The Internet – Services industry is part of the IT and technology sector. This group has a Zacks industry ranking of 203, which places it in the bottom 20% of all 250 industries.

The Zacks Industry Rankings are ranked from best to worst in terms of the average Zacks Ranking of individual companies in each of these industries. Our research shows that the top 50% of industries outperform the bottom half by a factor of 2 to 1.

Be sure to track all of these stock movement metrics, and more, at Zacks.com.

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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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