Alphabet (Google)’s stock (NASDAQ: GOOG) is scheduled to report its fiscal Q3 2021 results on Tuesday, October 26. We expect GOOG to beat the consensus estimates for revenues but miss for earnings. The company has reported better than expected revenues and earnings figures in each of the last four quarters. In the first half of the year the company’s revenue growth was led by the YouTube Ads segment and Google Cloud segment. Google Search continued to see a steady growth. We expect the same to drive the third-quarter FY2021 results, as well. Our forecast indicates that Google’s valuation is around $3001 per share, which is 5.6% above the current market price of $2842. Look at our interactive dashboard analysis on Google’s pre-earnings: What To Expect in Q3? for more details.
(1) Revenues expected to be ahead of consensus estimates
Google’s revenues for full-year 2020 were $182.5 billion – up 13% y-o-y, with high growth seen due to growth in YouTube Ads segment and Google Cloud segment. Trefis estimates GOOG’s fiscal Q3 2021 revenues to be around $65.41 billion, above the $63.45 billion consensus estimate. We expect the YouTube Ads segment and Google Cloud segment to continue to drive results. Our dashboard on Google’s revenues offers more details on the company’s operating segments along with our forecast for the next two years.
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(2) EPS likely to miss the consensus estimates
GOOG’s Q3 2021 earnings per share (EPS) is expected to be $21.50 per Trefis analysis, below the consensus estimate of $23.47. The company’s net income margin rose slightly in 2020 and is expected to continue growing in 2021. Altogether, the company is likely to report an EPS of around $96.32 in FY2021.
(3) Stock price estimate 5.6% above the current market price
Going by our Google’s valuation, an EPS estimate of around $114.47 in FY 2022 and a P/E multiple of 26.2x, translates into a price of $3001, which is 5.6% above the current market price of $2842.
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