Many fundamentalists and stock analysts are of opinion that the stock of Google could soar 50% over the next three and a half years. The notion got even better, with the Feb. 23, 2015 announcement that Google will purchase the mobile payment company Softcard (formerly known as Isis) to use the Softcard Technology as Google Wallet. The shares of Google are presently trading at $573.37 with a 52 week High and Low of $604.83 and $487.56 respectively.
The purchase also guarantees pre-installment of Google Wallet on all Verizon Communication Inc. (NYSE: VZ), T-Mobile US Inc. (NYSE: PCS), and AT&T Inc. The company has reported fourth quarter (Dec 2014) Earnings Per Share (EPS) of $6.88 – $0.20 under projections. Revenue came in at $14.5 billion (16.9% growth year over year), also under expectations by $110 million. Google is almost ready to sell mobile phone plans directly to customers and manage their calls and mobile data over a cellular network.
GOOG’s mobile service project, code named “Nova,” is likely to launch sometime in 2015. Some employees have already tested it. Even the PayPal co-founder Peter Thiel has echoed the same sentiment, “there appears to be more upside for Google stock over the next decade than for Apple…” Google is reportedly working on a way for Glass users to transfer money to their friends through Wallet, by voice-commands.
This company’s debt to total capital ratio, at 7.12%, is in-line with the Internet Software and Services industry’s norm. Additionally, an examination of near-term assets and liabilities shows that there are enough liquid assets to satisfy current obligations. Accounts Receivable are typical for the industry, with 50.50 days worth of sales outstanding.
Some Relevant Data To Evaluate Google Financially
The stock analysts from Wall Street have issued the following guidance to measure financial performance of Google:
- Earning Growth Expectation> Internet Industry 6.90%, Service Industry 6.9%. Google 9.41%
- Price to Earnings Ratio (P/E Ratio), 2015 > Industry 87.60, Google 25.18
- Consensus Means EPS> 2014– 20.82 (actual), 2015– 22.78
- Current P/E Ratio 20.0781
- Estimated EPS (December 31, 2015) > $25.18; EPS (Actual 2014) $27.55; 2016 estimated EPS $21.17
- Current EPS (last 12 months) $20.99
- 12-month Price Target Range> Recent Close $573.37, Consensus $600, Expected $630. Price targets are calculated by estimating future earnings per share and then applying a price-to-earnings multiple, known as the P/E ratio
|Period Ending (in 000’s US$)||December 2014||December 2013||December 2012|
|Net Income Applicable to Common Shareholders||$14,444,000||$12,920,000||$10,737,000|
|Earnings Before Interest and Tax||$17,259,000||$15,899,000||$14,469,000|
Why Google Inc. (GOOG or GOOGL) Is Included In The Stock Watch?
Google, as the world’s largest Internet company and the most successful in organizing the world’s information, specializes in search and advertising and making it accessible and useful to most everyone always deserves a place in long-term investors’ core portfolios. Google was founded by Larry Page and Sergey Brin on September 4, 1998 while they were Ph.D. students at the Stanford University. Not only Google is the most successful search engine, it dictates SEO and rule the internet. In addition to that, the company own lots of other companies as well, like You Tube and Blogger, and also have mountains of web based products.
From February 12, 2001 till February 24, 2015, the company has made a total of 178 acquisitions. Google never made any real money until they released its best selling product – AdWords, which in a nutshell sells ad space next to related search results. 97% of Google’s revenue in 2011 came from advertisements (that’s a massive $32.2 billion out of a total of $37.9billion!). $43.7 billion in 2012 and in 2013, 68% of that revenue came from Google sites, from non-Google sites (the Google Display Network), the revenue was $3.4 billion. Signing up for Google AdWords is free.
You only pay when someone clicks your ad to visit your website, or calls you. In other words, when your advertising is working. Google uses three methods to partner with merchants and advertisers: Google Checkout, Google AdWords and Google AdSense.
Data Source: (i) http://www.nasdaq.com/symbol/goog/financials?query=income-statement
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