Google (NASDAQ:GOOG) is set to release its 1st quarter 2013 earnings this Thursday, April 18th at 1:30 p.m (Pacific Time). Below I have provided an update of the quarter as well as an overview of earnings expectations.
Profile and Estimates
Google has a market cap of $260.45 billion and currently trades for $782.29 per share. Shares are up 11.69% YTD and trade 40.5% above their 52 week low of $556.52. Analysts have a mean target price of $879.94 and a median price target of $860.00 on the shares. Thirty six analysts have an average first quarter earnings per share estimate of $10.69 on estimated revenues of $14.04 billion. Google has beat earnings estimates in 3 of the last four quarters.
Fundamentals and Highlights
- Operating margin of 25.4%, net margin of 21.4% and ROE of 16.5 are all above the industry averages 17%, 18.7% and 13.6 respectively.
- Current P/E of 24.4 is below the industry averages 27.5 but above Google's 5-year P/E average of 23.9.
- P/B of 3.6 is below both the industry and Google's 5-year average of 4.0.
- Strong moat and user following for complementary products such as Google Maps, Google Chrome and Gmail.
- As #1 search engine, Google is perfectly positioned to benefit from growth in mobile and online advertising.
- Lots of Cash: Google had $48 billion in cash and short-term investments at the end of 2012 with only $22 billion in total liabilities.
- Recently this quarter, Google started to test same-day shipping in an effort to compete with Amazon and gain market share in e-commerce.
- Focus on software has allowed Google to deliver its products to users of any mobile platform.
- After 3 consecutive quarters or rising revenues, Google's 4th quarter 2012 revenues were down $886 million (6%) from 3Q2012's.
- Pending sale of Motorola Home to Arris Group (NASDAQ:ARRS) for $2.35 billion in cash and stock.
Google has performed nicely for shareholders over the past year and has potential to move even more should we see a substantial earnings beat this quarter. While I think Google is a perfect long-term play, I am personally buying Apple (NASDAQ:AAPL) after its recent fall but would be interested should shares get back into the low $700's.
Disclosure: I have no positions in any stocks mentioned, but may initiate a long position in AAPL over the next 72 hours. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.