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\n\n</article>\n</div>\n</body>\n</html>\n","isBrief":false,"type":0,"news_type":1,"symbol":"LU0310800965.SGD","symbol_name":"FTIF - Templeton Global Balanced A Acc SGD","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. Specifically, we like that th","collect":0,"end_time":0,"defaultTopTitle":"yahoo.com","property":[],"viewcount":null,"language":"en","relate_stocks":{"LU0310800965.SGD":"FTIF - Templeton Global Balanced A Acc SGD","IE0004445015.USD":"JANUS HENDERSON BALANCED \"A2\" (USD) ACC","LU0175139822.USD":"AB FCP I Global Equity Blend A USD","BK4579":"人工智能","LU0061474705.USD":"THREADNEEDLE (LUX) GLOBAL DYNAMIC REAL RETURN \"AU\" (USD) ACC","BK4527":"明星科技股","LU0648000940.SGD":"Natixis Harris Associates Global Equity RA SGD","LU2361044865.SGD":"WELLINGTON US QUALITY GROWTH \"A\" (SGDHDG) ACC","LU2087621335.USD":"ALLSPRING GLOBAL FACTOR ENHANCED EQUITY \"A\" (USD) ACC","BK4503":"景林资产持仓","LU1814569148.SGD":"WELLINGTON GLOBAL QUALITY GROWTH \"D\" (SGDHDG) ACC","BK4574":"无人驾驶","LU0648001328.SGD":"Natixis Harris Associates US Equity RA SGD","BK4561":"索罗斯持仓","LU0127658192.USD":"EASTSPRING INVESTMENTS GLOBAL TECHNOLOGY \"A\" (USD) ACC","IE00BJTD4N35.SGD":"Neuberger Berman US Long Short Equity A1  Acc SGD-H","LU0289941410.SGD":"AB FCP I Dynamic Diversified AX SGD","BK4548":"巴美列捷福持仓","SG9999014880.SGD":"大华全球优质成长基金Acc SGD","LU1316542783.SGD":"Janus Henderson Horizon Global Technology Leaders A2 SGD","LU0211328371.USD":"TEMPLETON GLOBAL EQUITY INCOME \"A\" (MDIS) (USD)   INC","IE00B775SV38.USD":"NEUBERGER BERMAN US MULTICAP OPPORTUNITIES \"A\" (USD) ACC","LU0128525929.USD":"TEMPLETON GLOBAL \"A\" (USD) ACC","LU0234570918.USD":"高盛全球核心股票组合Acc Close","LU0170899867.USD":"EASTSPRING INVESTMENTS WORLD VALUE EQUITY  \"A\" (USD) ACC","LU1839511570.USD":"WELLS FARGO GLOBAL FACTOR ENHANCED EQUITY \"I\" (USD) ACC","IE0004445239.USD":"JANUS HENDERSON US FORTY \"A2\" (USD) ACC","BK4532":"文艺复兴科技持仓","LU2237443382.USD":"Aberdeen Standard SICAV I - Global Dynamic Dividend A MIncA USD","BK4553":"喜马拉雅资本持仓","SG9999001077.SGD":"United International Growth Fund SGD","LU0079474960.USD":"联博美国增长基金A","LU0312595415.SGD":"Schroder ISF Global Climate Change Equity A Acc SGD","LU0889565833.HKD":"FRANKLIN TECHNOLOGY \"A\" (HKD) ACC","IE00BJTD4V19.USD":"NEUBERGER BERMAN US LONG SHORT EQUITY \"A1\" (USD) ACC","LU0052756011.USD":"TEMPLETON GLOBAL BALANCED \"A\" (USD) INC","LU2237443549.SGD":"Aberdeen Standard SICAV I - Global Dynamic Dividend A MIncA SGD-H","BK4507":"流媒体概念","LU0640476718.USD":"THREADNEEDLE (LUX) US CONTRARIAN CORE EQ \"AU\" (USD) ACC","LU0353189680.USD":"富国美国全盘成长基金Cl A Acc","LU2265009873.SGD":"Eastspring Investments - Global Growth Equity AS SGD-H","LU2237443622.USD":"Aberdeen Standard SICAV I - Global Dynamic Dividend A Acc USD","LU1280957306.USD":"THREADNEEDLE (LUX) US CONTRARIAN CORE EQUITIES \"AUP\" (USD) INC","BK4566":"资本集团","BK4587":"ChatGPT概念","LU0128525689.USD":"TEMPLETON GLOBAL BALANCED \"A\"(USD) ACC","LU0234572021.USD":"高盛美国核心股票组合Acc","IE00BSNM7G36.USD":"NEUBERGER BERMAN SYSTEMATIC GLOBAL SUSTAINABLE VALUE \"A\" (USD) ACC","GOOGL":"谷歌A","GOOG":"谷歌"},"translate_title":"Alphabet公司（纳斯达克：GOOGL）最近的股票表现与其强劲的基本面有关吗？","themeId":null,"isJumpTheme":false,"ttsUrl":null,"symbols_score_info":{"GOOG":0.9,"GOOGL":0.9},"content_text":"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 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":null,"is_publish_highlight":null,"is_publish_live":null,"is_publish_wemedia":null,"editions":null,"symbols":[],"gpt_button":1},"commentList":[],"hasMoreComments":false,"newsSizeData":{"likeSize":0,"commentSize":0,"repostSize":0,"favoriteSize":0,"likeStatus":false,"favoriteStatus":false}}