Alphabet Inc (GOOGL, Financial) has recently been in the spotlight, drawing interest from investors and financial analysts due to its robust financial stance. With shares currently priced at $158.23, Alphabet Inc has witnessed a daily gain of 0.32%, marked against a three-month change of 11.07%. A thorough analysis, underlined by the GF Score, suggests that Alphabet Inc is well-positioned for substantial growth in the near future.
What Is the GF Score?
The GF Score is a stock performance ranking system developed by GuruFocus using five aspects of valuation, which has been found to be closely correlated to the long-term performances of stocks by backtesting from 2006 to 2021. The stocks with a higher GF Score generally generate higher returns than those with a lower GF Score. Therefore, when picking stocks, investors should invest in companies with high GF Scores. The GF Score ranges from 0 to 100, with 100 as the highest rank.
- Financial strength rank: 9/10
- Profitability rank: 10/10
- Growth rank: 10/10
- GF Value rank: 5/10
- Momentum rank: 8/10
Each one of these components is ranked and the ranks also have positive correlation with the long term performances of stocks. The GF score is calculated using the five key aspects of analysis. Through backtesting, we know that each of these key aspects has a different impact on the stock price performance. Thus, they are weighted differently when calculating the total score. With high ranks in financial strength, profitability, and growth, but a moderate GF Value rank, GuruFocus assigned Alphabet Inc the GF Score of 97 out of 100, which signals the highest outperformance potential.
Understanding Alphabet Inc's Business
Alphabet Inc, with a market cap of $1.98 trillion and sales of $307.39 billion, is a holding company that primarily operates through its subsidiary, Google. Google's services, including online ads, apps, content on Google Play and YouTube, as well as hardware products like Chromebooks and the Pixel smartphone, contribute to nearly 90% of Alphabet's revenue. The company's cloud computing offerings represent over 10% of total revenue. Alphabet also invests in ambitious 'moonshot' projects through its other bets segment, focusing on advancements in health, internet access, self-driving cars, and more. With an operating margin of 27.42%, Alphabet Inc demonstrates strong profitability and operational efficiency.
Financial Strength Breakdown
Alphabet Inc's Financial Strength rating is a testament to its resilient balance sheet and prudent capital management. The company's Interest Coverage ratio of 273.68 far exceeds Benjamin Graham's recommended threshold, indicating a strong ability to meet interest obligations. An Altman Z-Score of 12.4 places Alphabet Inc well above the danger zone for financial distress, while a Debt-to-Revenue ratio of 0.09 shows a strategic and conservative approach to debt management.
Profitability Rank Breakdown
The Profitability Rank of Alphabet Inc is exemplary, reflecting its superior ability to generate profits. The company's Operating Margin has shown a positive trend over the past five years, indicating increasing operational efficiency. Alphabet's Gross Margin also demonstrates a consistent upward trajectory, highlighting its effectiveness in converting revenue into profit. The Piotroski F-Score and a Predictability Rank of 5 stars further confirm Alphabet Inc's solid financial condition and reliable operational performance.
Growth Rank Breakdown
Alphabet Inc's high Growth Rank underscores its commitment to business expansion. The company's 3-Year Revenue Growth Rate of 22.1% surpasses the majority of its industry peers. Alphabet Inc's EBITDA growth rates over the past three and five years highlight its sustained ability to drive profitability and growth.
Next Steps
Considering Alphabet Inc's financial strength, profitability, and growth metrics, the GF Score highlights the firm's unparalleled position for potential outperformance. Investors seeking to capitalize on such robust financial health and promising growth trajectory can explore more companies with strong GF Scores using the GF Score Screen. As Alphabet Inc continues to innovate and expand, its financial metrics paint a picture of a company not just leading the market, but shaping its future.
This article, generated by GuruFocus, is designed to provide general insights and is not tailored financial advice. Our commentary is rooted in historical data and analyst projections, utilizing an impartial methodology, and is not intended to serve as specific investment guidance. It does not formulate a recommendation to purchase or divest any stock and does not consider individual investment objectives or financial circumstances. Our objective is to deliver long-term, fundamental data-driven analysis. Be aware that our analysis might not incorporate the most recent, price-sensitive company announcements or qualitative information. GuruFocus holds no position in the stocks mentioned herein.
