A Closer Look at Alphabet StockCurrent estimates call for full-year earnings and revenue growth of ~30% and 23%, respectively. That's pretty impressive growth rates for a company sporting a market cap north of $725 billion.
While those expectations for 2019 slow to
12.5% earnings and 19.5% revenue growth, we still have to appreciate the rate in which Alphabet continues to grow its sales.
We also have to appreciate its assets.
Google.com and YouTube.com are the top two most popular websites in the world, while Alphabet has successfully rolled out new business segments.
For instance, its autonomous driving unit, Waymo, has fetched long-term valuations in excess of $150 billion from analysts.
Its cloud unit has quickly become one of the largest in the market and exhibiting impressive growth rates.
As Alphabet continues to make innovations in smart home products, smartphones, mobile search, cloud, autonomous driving, artificial intelligence and online video, its assets become more and more valuable.
It's important for technology companies to build on their legacy businesses, in order to fuel revenue growth. As they become more efficient over time, they can become more profitable, but Wall Street will continue to care about sales growth, nonetheless.
Thankfully for Alphabet, we're not talking about a profit-less, debt-ridden overvalued entity. In fact, the company is quite profitable and trades at a relatively healthy 25 times this year's earnings.
That may not seem all that reasonable to some investors, but for a blue-chip technology stock with 20% annual sales growth, I find it reasonable for long-term investors.
Further, while Alphabet may not have the balance sheet and cash flow power of Apple, it's no chump on its own. Alphabet has more than
$106 billion in cash and short-term investments on its balance sheet, with just
$3.9 billion in long-term debt.Below $1,000 per share and the stock, technically speaking, may be in some trouble. But if that level holds, buyers won't regret nibbling some Alphabet stock on this decline.
Source: The Street
https://www.thestreet.com/investing/sto ... t-14789026
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