Google (GOOG) Stock Analysis and Intrinsic Value | Buy Now or Wait?

Google (GOOG) Stock Analysis. This video will provide an updated analysis of Google’s business, technical analysis and 2 different valuations of the stock using Discounted Cash Flow (DCF) model and EPS multiples model. The intrinsic value of a stock is its true value (fair price). In this video we will also assess the main strengths and risks of the company, as well as Wall Street’s predictions and forecast for 2022.

Hi guys today we will analyze google stock and calculate its intrinsic value using two different valuation models enjoy hit the like button and subscribe to my channel if you want to see more videos like this technical analysis the short-term trend is positive while the long-term trend is neutral support levels are around two thousand eight hundred twenty dollars

And two thousand six hundred sixty dollars strong support level is around two thousand five hundred dollars resistance level is around 3015 volume is considerably higher in the last couple of days which is what you like to see during a strong movement up price movement has been too volatile to find a nice entry point it is probably a good idea to wait for a

Consolidation first the stock has an average volume of 1.5 million this is a good sign as it is always nice to have a liquid stock intrinsic value buy low sell high we have heard it many times before but how to know when it’s low and when it’s high the intrinsic value of a stock is its true value it refers to what a stock is actually worth even if some investors

Think it’s worth a lot more than that amount intrinsic value is important because it can help investors understand whether the cost of a stock is undervalued or overvalued compared to the market value of the stock let’s calculate the stock’s intrinsic value for more accurate results we will use two different valuation models to calculate the intrinsic value of

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The stock discounted free cash flow model using the formula below then valuation based on earnings per share five your average p e ratio and expected growth rate first model discounted free cash flow valuation this spreadsheet contains some financial data that we will use for the stock valuation we see that the average revenue growth rate of the stock has been

Around 24 per year for last five years we see that the average profit margin of the stock has been around 21 per year for last five years also we see that the average free cash flow to net income rate of the stock has been around 110 per year for last five years and we expect eight percent per year average stock market return now let’s consider three different

Scenarios for google company bad average and good first scenario google will have bad performance in next five years and we will use the following parameters in our calculation future revenue growth rate would be a low eight percent future profit margin would be low 20 future free cash flow to net income rate would be a low 80 percent in this case the fair value

Of the stock today would be 1 388 dollars the second scenario google will have average performance in next five years and we will use the following parameters in our calculation future revenue growth rate would be average 11 future profit margin would be average 22 future free cash flow to net income rate would be average 95 in this case the fair value of the

Stock today would be 1991 dollars the third scenario google will have high performance in next five years and we will use the following parameters in our calculation future revenue growth rate would be high 14 future profit margin would be high 24 future free cash flow to net income rate would be high 110 in this case the fair value of the stock today would be

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2 77 second model valuation based on earnings per share this spreadsheet contains another financial data that we will use for the stock valuation the current earning per share price for the company is 112.2 minimum rate of return i will use 12 because when we invest in individual companies we are looking for a higher return than the s p 500 for google analysts

Forecast growth rate around 16 per year in next five years and future pe around 25. again i will use three different scenarios for google company bad average and good first scenario google will have bad performance in next five years and we will use the following parameters in our calculation future growth rate would be a low 8 percent future pe would be low 21.

In this case the fair value of the stock today would be 1 698 second scenario google will have average performance in next five years and we will use the following parameters in our calculation future growth rate would be average 11 future pe would be average 23. in this case the fair value of the stock today would be 2 380 third scenario google will have high

Performance in next five years and we will use the following parameters in our calculation future growth rate would be high 14 future pe would be high 25 in this case the fair value of the stock today would be 3 289 as you can see today the stock is fairly valued 2 865 if we expect the company’s high performance in future the fundamentals are great and the stock

Is currently fairly priced if you expect google’s high performance in future google announced that it plans to do a 24-1 stock split in july 2022 the split may push the stock’s price up i bought the stock a few years ago and i will buy more if it drops below 2 600 before the split company strengths google is the world’s leading internet search provider and the

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World’s largest generator of advertising revenue through youtube the balance sheet remains sound google cloud continues to ride the ongoing migration of enterprise apps to the cloud youtube ads is benefiting from the ongoing shift of global ad spend to digital online as the number of online users and usage increase so will digital ad spending of which google will

Remain one of the main beneficiaries android’s dominant global market share of smartphones leaves google well positioned to continue generating top-line growth as search traffic shifts from desktop to mobile massive long-term potential including machine learning natural language processing and efforts in cognitive computing self-driving vehicles quantum computing

Drone delivery smart homes and wearables risks there are some concerns about the regulatory environment and pressures from higher operating expenses capital spending some governments may simply forbid access to some of google’s properties which could result in lower user growth and monetization google’s dominant position in online search is not sustainable as

More companies and regulatory agencies are contesting the methods through which the company has been extending its leadership there is little revenue diversification within alphabet as it remains heavily dependent on google in the state of the search ad space google is allocating too much capital toward high-risk bets which face a very low probability of generating

Returns thank you for watching if you found this video helpful please hit the like button and subscribe to my channel

Transcribed from video
Google (GOOG) Stock Analysis and Intrinsic Value | Buy Now or Wait? By Andrew Finance