GOOGL
📊 Comparative analysis suggests Google’s valuation might be misaligned (‘descalibrado’) relative to peers like Apple and Microsoft, considering its sales, earnings, and cash flow projections.
📉 Key valuation metrics, such as Price/Earnings (below 20) and Price/Sales, are currently sitting at unusually low levels for the company, indicating potential undervaluation.
💪 Fundamental strength is evident through improving margins, high ROIC (Return on Invested Capital), significant share buybacks, strong liquidity, and negative net debt (more cash than debt).
@ClaveBursatilTV:
“Here we are with Google, one of the most beautiful companies we’ve been studying for a while. I’ve been studying its sales, earnings, and cash flow, comparing it with Microsoft and Apple to see if any price is misaligned. It seems to me that Google’s price might be misaligned. What does that mean? Well, with the level of sales, earnings, and cash flow projected for the next three years, if those projections hold, the valuation doesn’t align with Apple’s, which is much higher, or Microsoft’s, which is a bit higher. So, looking at the three, Google seems to have the most potential. Investing Pro’s fair value models place it around $171 on average, compared to its current trading price around $152. Most models place it there. What I also like to see are the charts. You can see what’s happening with sales, any dip in earnings, which was also a dip in sales but not a drop. Here, there was a drop in earnings. This earnings per share versus price chart is fantastic because it shows how EPS is growing; if there’s a disconnect, it corrects later. Look what happened here: well-correlated, well-correlated, well-correlated. Look what’s happening in this stage, it seems an opportunity is opening up. The market cap is around $1.9 trillion. Look at the disconnect between this value and the expected earnings per share, both current and future, which are also trending upwards. The same happens with price-to-sales, currently around 6 times, when the average is about 6.5. Price-to-earnings is in a zone rarely seen for Google, below 20, maybe around 18 today, very rare for such a company. Price-to-EBITDA is also low, around 13.5. Net income and cash flow correlation is excellent. Margins are phenomenal and improving since February 2023. ROA, ROE, and ROIC are also improving significantly since 2022, with ROIC doubling since 2015; it’s a money-making machine. Shares outstanding have been reduced through buybacks, about 10-15% of the company repurchased, a very good sign. Debt is minimal relative to earnings, basically nothing for Google, and cash reserves exceed debt. Liquidity ratios are fantastic, showing ample working capital. Net debt is negative, meaning more cash than debt. These Investing Pro graphs are excellent and allow for a quick conclusion. It seems like an opportunity might be here among the giants.”
Watch the exact part of the video where @ClaveBursatilTV talks about Alphabet Inc. (Google) here:
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