GOOGL - Embedded Expectations Analysis - 2018 11 14
Alphabet, Inc (GOOGL:USA) currently trades below corporate averages relative to UAFRS-based (Uniform) Earnings, with a 16.7x Uniform P/E, implying fairly bearish expectations for the firm. While management may have concerns about the Pixel, foreign exchange volatility, and Verily, the firm's leadership position in its space and lack of management concern about competitive or expense pressures suggest longer-term upside remains warrantedSpecifically, management may be concerned about their ability to scale their Pixel smart phone product line, and to maintain Google Home user growth at current levels. Additionally, they may lack confidence in their ability to leverage machine learning to provide a better experience for users and advertisers, and may be concerned about the impact of foreign exchange volatility on their performance. Finally, they may lack confidence in their ability to sustain strong growth in the U.S. across their segments, and to execute on its various partnerships with pharmaceutical companies through Verily, specifically ResMed and Gilead. That said, management is confident in their investment in user experience, and management also did not show concerns about expense pressures that would warrant the market's very pessimistic expectations for ROA' going forward. The firm maintains a leadership position in a space with continued tailwinds, suggesting market expectations are overly bearish, warranting further upside
Alphabet is a holding company. Through its subsidiaries, the company is engaged in a collection of businesses, which its primary business is Google. The company reports all non-Google businesses collectively as Other Bets. Google's main products and platforms are Android, Chrome, Gmail, Google Drive, Google Maps, Google Play, Search, and YouTube. The company also provides advertisers with tools that help them attribute and measure their advertising campaigns. In addition, Other Bets includes Access, Calico, CapitalG, GV, Verily, Waymo, and X, among others. Other Bets primarily engages in the sales of internet and TV services through Access as well as licensing and research and development services through Verily.
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