NASDAQ:GOOG stands out as a growth opportunity that won't break the bank.

Last update: Aug 23, 2024

ALPHABET INC-CL C (NASDAQ:GOOG) was identified as an affordable growth stock by our stock screener. NASDAQ:GOOG is showing great growth, but also scores well on profitability, solvency and liquidity. At the same time it seems to be priced reasonably. We'll explore this a bit deeper below.

Understanding NASDAQ:GOOG's Growth

To evaluate a stock's growth potential, ChartMill utilizes a Growth Rating on a scale of 0 to 10. This comprehensive assessment considers various growth aspects, including historical and estimated EPS and revenue growth. NASDAQ:GOOG has achieved a 7 out of 10:

GOOG shows a strong growth in Earnings Per Share. In the last year, the EPS has been growing by 47.67%, which is quite impressive.
The Earnings Per Share has been growing by 19.55% on average over the past years. This is quite good.
Looking at the last year, GOOG shows a quite strong growth in Revenue. The Revenue has grown by 13.38% in the last year.
Measured over the past years, GOOG shows a quite strong growth in Revenue. The Revenue has been growing by 17.57% on average per year.
Based on estimates for the next years, GOOG will show a quite strong growth in Earnings Per Share. The EPS will grow by 19.96% on average per year.
The Revenue is expected to grow by 10.62% on average over the next years. This is quite good.

How We Gauge Valuation for NASDAQ:GOOG

ChartMill assigns a proprietary Valuation Rating to each stock. The score is computed by evaluating various valuation aspects, like price to earnings and free cash flow, both absolutely as relative to the market and industry. NASDAQ:GOOG was assigned a score of 6 for valuation:

69.57% of the companies in the same industry are more expensive than GOOG, based on the Price/Earnings ratio.
GOOG's Price/Forward Earnings ratio is a bit cheaper when compared to the industry. GOOG is cheaper than 65.22% of the companies in the same industry.
Compared to the rest of the industry, the Enterprise Value to EBITDA ratio of GOOG indicates a somewhat cheap valuation: GOOG is cheaper than 71.01% of the companies listed in the same industry.
63.77% of the companies in the same industry are more expensive than GOOG, based on the Price/Free Cash Flow ratio.
The low PEG Ratio(NY), which compensates the Price/Earnings for growth, indicates a rather cheap valuation of the company.
GOOG has an outstanding profitability rating, which may justify a higher PE ratio.
GOOG's earnings are expected to grow with 21.15% in the coming years. This may justify a more expensive valuation.

Analyzing Health Metrics

To gauge a stock's financial health, ChartMill utilizes a Health Rating on a scale of 0 to 10. This comprehensive evaluation encompasses liquidity and solvency, both in absolute terms and in comparison to industry peers. NASDAQ:GOOG has earned a 9 out of 10:

An Altman-Z score of 13.36 indicates that GOOG is not in any danger for bankruptcy at the moment.
The Altman-Z score of GOOG (13.36) is better than 94.20% of its industry peers.
The Debt to FCF ratio of GOOG is 0.23, which is an excellent value as it means it would take GOOG, only 0.23 years of fcf income to pay off all of its debts.
The Debt to FCF ratio of GOOG (0.23) is better than 82.61% of its industry peers.
A Debt/Equity ratio of 0.04 indicates that GOOG is not too dependend on debt financing.
A Current Ratio of 2.08 indicates that GOOG has no problem at all paying its short term obligations.
A Quick Ratio of 2.08 indicates that GOOG has no problem at all paying its short term obligations.

What does the Profitability looks like for NASDAQ:GOOG

ChartMill employs its own Profitability Rating system for stock evaluation. This score, ranging from 0 to 10, is derived from an analysis of diverse profitability metrics and margins. In the case of NASDAQ:GOOG, the assigned 9 is noteworthy for profitability:

Looking at the Return On Assets, with a value of 21.13%, GOOG belongs to the top of the industry, outperforming 95.65% of the companies in the same industry.
Looking at the Return On Equity, with a value of 29.15%, GOOG belongs to the top of the industry, outperforming 94.20% of the companies in the same industry.
GOOG has a better Return On Invested Capital (25.85%) than 97.10% of its industry peers.
Measured over the past 3 years, the Average Return On Invested Capital for GOOG is significantly above the industry average of 10.43%.
The 3 year average ROIC (22.84%) for GOOG is below the current ROIC(25.85%), indicating increased profibility in the last year.
With an excellent Profit Margin value of 26.70%, GOOG belongs to the best of the industry, outperforming 94.20% of the companies in the same industry.
The Operating Margin of GOOG (30.77%) is better than 97.10% of its industry peers.
GOOG's Operating Margin has improved in the last couple of years.

Every day, new Affordable Growth stocks can be found on ChartMill in our Affordable Growth screener.

Our latest full fundamental report of GOOG contains the most current fundamental analsysis.

Keep in mind

This is not investing advice! The article highlights some of the observations at the time of writing, but you should always make your own analysis and invest based on your own insights.