This mega-tech company beat analysts’ estimates by $0.34 last quarter. But since the shares have risen in the double-digits, the stock is now a ‘hold’.
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Alphabet Inc. (GOOGL)
From Hendershot Investments
Alphabet Inc. (GOOGL) reported 2017 first quarter revenues rose 22%, to $25 billion, with net income up 29%, to $5.4 billion, and EPS up 28%, to $7.73.
The results were driven by Google’s strong advertising revenue. Aggregate paid clicks jumped 44% during the quarter with aggregate cost-per-click down 19% due to the explosion in mobile usage. During the quarter, Google expanded safeguards for ad placement by broadening the definition of inappropriate content and adding controls for advertisers, including the deployment of machine learning to identify extreme content.
In the Other Bets segment, Waymo, Alphabet’s standalone driverless car unit, embarked on an early rider program where applicants accepted into the program summon a Waymo driverless car via an app to go wherever they want in the Phoenix metropolitan area—at any hour. The free program will allow Alphabet to collect reams of data about how driverless cars will be used in practice.
Free cash flow increased 35%, to $7 billion, during the first quarter, with the company repurchasing $1.1 billion of its own shares. Alphabet ended the quarter with $92 billion in cash and marketable securities on its fortress balance sheet.
It is no wonder that Barron’s recently named Alphabet as the “Most Respected Company in America.” With Alphabet’s stock up more than 20%, we now have it rated as a Hold, based on 2017 expected earnings.
Ingrid R. Hendershot, Hendershot Investments, www.hendershotinvestments.com, 703-361-6130, June 21, 2017