Is Alphabet Inc.'s (NASDAQ:GOOGL) Recent Stock Performance Tethered To Its Strong Fundamentals?

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Is Alphabet Inc.'s (NASDAQ:GOOGL) Recent Stock Performance Tethered To Its Strong Fundamentals?

Simply Wall St.2023-07-25

Most readers would already be aware that Alphabet's (NASDAQ:GOOGL) stock increased significantly by 17% over the past three months. Given that the market rewards strong financials in the long-term, we...

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Given that the market rewards strong financials in the long-term, we...</p>\n\n<a href=\"https://finance.yahoo.com/news/alphabet-inc-nasdaq-googl-recent-120015792.html\">Source Link</a>\n\n</div>\n","source":"yahoofinance","html":"<!DOCTYPE html>\n<html>\n<head>\n<meta http-equiv=\"Content-Type\" content=\"text/html; charset=utf-8\" />\n<meta name=\"viewport\" content=\"width=device-width,initial-scale=1.0,minimum-scale=1.0,maximum-scale=1.0,user-scalable=no\"/>\n<meta name=\"format-detection\" content=\"telephone=no,email=no,address=no\" />\n<title>Is Alphabet Inc.'s (NASDAQ:GOOGL) Recent Stock Performance Tethered To Its Strong Fundamentals?</title>\n<style type=\"text/css\">\na,abbr,acronym,address,applet,article,aside,audio,b,big,blockquote,body,canvas,caption,center,cite,code,dd,del,details,dfn,div,dl,dt,\nem,embed,fieldset,figcaption,figure,footer,form,h1,h2,h3,h4,h5,h6,header,hgroup,html,i,iframe,img,ins,kbd,label,legend,li,mark,menu,nav,\nobject,ol,output,p,pre,q,ruby,s,samp,section,small,span,strike,strong,sub,summary,sup,table,tbody,td,tfoot,th,thead,time,tr,tt,u,ul,var,video{ font:inherit;margin:0;padding:0;vertical-align:baseline;border:0 }\nbody{ font-size:16px; line-height:1.5; color:#999; background:transparent; }\n.wrapper{ overflow:hidden;word-break:break-all;padding:10px; }\nh1,h2{ font-weight:normal; line-height:1.35; margin-bottom:.6em; }\nh3,h4,h5,h6{ line-height:1.35; margin-bottom:1em; }\nh1{ font-size:24px; }\nh2{ font-size:20px; }\nh3{ font-size:18px; }\nh4{ font-size:16px; }\nh5{ font-size:14px; }\nh6{ font-size:12px; }\np,ul,ol,blockquote,dl,table{ margin:1.2em 0; }\nul,ol{ margin-left:2em; }\nul{ list-style:disc; }\nol{ list-style:decimal; }\nli,li p{ margin:10px 0;}\nimg{ max-width:100%;display:block;margin:0 auto 1em; }\nblockquote{ color:#B5B2B1; border-left:3px solid #aaa; padding:1em; }\nstrong,b{font-weight:bold;}\nem,i{font-style:italic;}\ntable{ width:100%;border-collapse:collapse;border-spacing:1px;margin:1em 0;font-size:.9em; }\nth,td{ padding:5px;text-align:left;border:1px solid #aaa; }\nth{ font-weight:bold;background:#5d5d5d; }\n.symbol-link{font-weight:bold;}\n/* header{ border-bottom:1px solid #494756; } */\n.title{ margin:0 0 8px;line-height:1.3;color:#ddd; }\n.meta {color:#5e5c6d;font-size:13px;margin:0 0 .5em; }\na{text-decoration:none; color:#2a4b87;}\n.meta .head { display: inline-block; overflow: hidden}\n.head .h-thumb { width: 30px; height: 30px; margin: 0; padding: 0; border-radius: 50%; float: left;}\n.head .h-content { margin: 0; padding: 0 0 0 9px; float: left;}\n.head .h-name {font-size: 13px; color: #eee; margin: 0;}\n.head .h-time {font-size: 11px; color: #7E829C; margin: 0;line-height: 11px;}\n.small {font-size: 12.5px; display: inline-block; transform: scale(0.9); -webkit-transform: scale(0.9); transform-origin: left; -webkit-transform-origin: left;}\n.smaller {font-size: 12.5px; display: inline-block; transform: scale(0.8); -webkit-transform: scale(0.8); transform-origin: left; -webkit-transform-origin: left;}\n.bt-text {font-size: 12px;margin: 1.5em 0 0 0}\n.bt-text p {margin: 0}\n</style>\n</head>\n<body>\n<div class=\"wrapper\">\n<header>\n<h2 class=\"title\">\nIs Alphabet Inc.'s (NASDAQ:GOOGL) Recent Stock Performance Tethered To Its Strong Fundamentals?\n</h2>\n\n<h4 class=\"meta\">\n\n\n2023-07-25 20:00 GMT+8&nbsp;&nbsp;&nbsp;<a href=https://finance.yahoo.com/news/alphabet-inc-nasdaq-googl-recent-120015792.html><strong>Simply Wall St.</strong></a>\n\n\n</h4>\n\n</header>\n<article>\n<div>\n<p>Most readers would already be aware that Alphabet's (NASDAQ:GOOGL) stock increased significantly by 17% over the past three months. Given that the market rewards strong financials in the long-term, we...</p>\n\n<a href=\"https://finance.yahoo.com/news/alphabet-inc-nasdaq-googl-recent-120015792.html\">Source Link</a>\n\n</div>\n\n\n</article>\n</div>\n</body>\n</html>\n","isBrief":false,"type":0,"news_type":1,"symbol":"LU2237443549.SGD","symbol_name":"Aberdeen Standard SICAV I - Global Dynamic Dividend A MIncA SGD-H","start_time":0,"source_url":"https://finance.yahoo.com/news/alphabet-inc-nasdaq-googl-recent-120015792.html","article_id":"2354939016","we_media_id":null,"thumbnails":["https://s.yimg.com/uu/api/res/1.2/qFxOq7rHmi5HDVnxqXn6Rg--~B/aD00MzI7dz0xMTk0O2FwcGlkPXl0YWNoeW9u/https://media.zenfs.com/en/simply_wall_st__316/24a8be9e4dd93a7a5c866dec7c65e1eb"],"rights":null,"url":"https://stock-news.laohu8.com/highlight/detail?id=2354939016","pubTimestamp":1690286415,"sourceInfo":{"source_id":"yahoofinance","name":"雅虎金融"},"weMediaInfo":null,"summary":"Most readers would already be aware that Alphabet's  stock increased significantly by 17% over the past three months. Given that the market rewards strong financials in the long-term, we wonder if that is the case in this instance. Specifically, we decided to study Alphabet's  ROE in this article.Return on equity or ROE is an important factor to be considered by a shareholder because it tells them how effectively their capital is being reinvested. In simpler terms, it measures the profitability of a company in relation to shareholder's equity.Return on equity can be calculated by using the formula:. Return on Equity = Net Profit  ÷ Shareholders' Equity. So, based on the above formula, the ROE for Alphabet is:. On the whole, we feel that Alphabet's performance has been quite good. 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Given that the market rewards strong financials in the long-term, we wonder if that is the case in this instance. Specifically, we decided to study Alphabet's  ROE in this article. \n Return on equity or ROE is an important factor to be considered by a shareholder because it tells them how effectively their capital is being reinvested. In simpler terms, it measures the profitability of a company in relation to shareholder's equity. \n View our latest analysis for Alphabet \n How Do You Calculate Return On Equity? \n Return on equity can be calculated by using the formula: \n Return on Equity = Net Profit (from continuing operations) ÷ Shareholders' Equity \nSo, based on the above formula, the ROE for Alphabet is:\n22% = US$59b ÷ US$261b (Based on the trailing twelve months to March 2023).\n The 'return' is the profit over the last twelve months. Another way to think of that is that for every $1 worth of equity, the company was able to earn $0.22 in profit. \n What Has ROE Got To Do With Earnings Growth? \n We have already established that ROE serves as an efficient profit-generating gauge for a company's future earnings. We now need to evaluate how much profit the company reinvests or \"retains\" for future growth which then gives us an idea about the growth potential of the company. Assuming everything else remains unchanged, the higher the ROE and profit retention, the higher the growth rate of a company compared to companies that don't necessarily bear these characteristics. \n Alphabet's Earnings Growth And 22% ROE \n First thing first, we like that Alphabet has an impressive ROE. Second, a comparison with the average ROE reported by the industry of 7.8% also doesn't go unnoticed by us. Under the circumstances, Alphabet's considerable five year net income growth of 26% was to be expected. \n As a next step, we compared Alphabet's net income growth with the industry, and pleasingly, we found that the growth seen by the company is higher than the average industry growth of 3.6%. \n\n\n\n  NasdaqGS:GOOGL Past Earnings Growth July 25th 2023\n \n\n Earnings growth is a huge factor in stock valuation. It’s important for an investor to know whether the market has priced in the company's expected earnings growth (or decline). By doing so, they will have an idea if the stock is headed into clear blue waters or if swampy waters await. Has the market priced in the future outlook for GOOGL? You can find out in our latest intrinsic value infographic research report.  \n Is Alphabet Efficiently Re-investing Its Profits? \n Alphabet doesn't pay any dividend to its shareholders, meaning that the company has been reinvesting all of its profits into the business. This is likely what's driving the high earnings growth number discussed above. \n Conclusion \n On the whole, we feel that Alphabet's performance has been quite good. Specifically, we like that the company is reinvesting a huge chunk of its profits at a high rate of return. This of course has caused the company to see substantial growth in its earnings. That being so, a study of the latest analyst forecasts show that the company is expected to see a slowdown in its future earnings growth. To know more about the latest analysts predictions for the company, check out this visualization of analyst forecasts for the company. \nHave feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team (at) simplywallst.com.This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.\nJoin A Paid User Research SessionYou’ll receive a US$30 Amazon Gift card for 1 hour of your time while helping us build better investing tools for the individual investors like yourself. Sign up here","kind":null,"is_publish_news":true,"is_publish_highlight":false,"is_publish_live":false,"is_publish_wemedia":null,"editions":null,"column":"","sentiment":"0","news_tag":"","news_rank":0,"symbols":[],"gpt_button":1},"commentList":[],"hasMoreComments":false,"newsSizeData":{"likeSize":0,"commentSize":0,"repostSize":0,"favoriteSize":0,"likeStatus":false,"favoriteStatus":false}}