As part of our ongoing series here at The Acquirer’s Multiple, we provide this feature article titled ‘Stock in Focus‘ where we focus on one of the stocks from our Stock Screeners.
One of the cheapest stocks in our Stock Screeners is:
Alphabet Inc (GOOGL)
Alphabet is a holding company. Internet media giant Google is a wholly owned subsidiary. Google generates 99% of Alphabet revenue, of which more than 85% is from online ads. Google’s other revenue is from sales of apps and content on Google Play and YouTube, as well as cloud service fees and other licensing revenue. Sales of hardware such as Chromebooks, the Pixel smartphone, and smart home products, which include Nest and Google Home, also contribute to other revenue. Alphabet’s moonshot investments are in its other bets segment, where it bets on technology to enhance health (Verily), faster internet access to homes (Google Fiber), self-driving cars (Waymo), and more. Alphabet’s operating margin has been 25%-30%, with Google at 30% and other bets operating at a loss.
A quick look at the share price history (below) over the past twelve months shows that the price is down 26%. Here’s why the company is undervalued.
Key Stats
Market Cap: $1.332 Trillion
Enterprise Value: $1.249 Trillion
Operating Earnings
Operating Earnings: $72 Billion
Acquirer’s Multiple
Acquirer’s Multiple: 17.10
Free Cash Flow (TTM)
Free Cash Flow: $60 Billion
FCF/EV Yield %:
FCF/EV Yield: 7.63
Shareholder Yield %:
Shareholder Yield: 4.50
Other Indicators
Piotroski F-Score: 5.00
Altman Z-Score: 8.719
ROA (5 Year Avge%): 20
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