Apple Stock Analysis:
Hey what’s up guys welcome back to the channel my name is frank milarsik and in this video we’re going to be doing a brief stock analysis on alphabet company ticker symbol g-o-o-g or g-o-o-g-l and we are going to be going over the earnings talking about some news that they sort of released during the earnings and then looking at the balance sheet and some valuation
Metrics to try to get a good idea if it’s now is a good time to buy or not so first of all we’re going to look at the earnings this is just their earnings report that they released a few days ago february 1st 2022 for the quarter and fiscal year ended december 31st 2021 so they announced those earnings the ceo says our deep investment in ai continues to drive
Extraordinary and helpful experience for people and businesses across our most important products q4 saw ongoing strong growth in our advertising business which helped millions of businesses thrive and find new customers a quarterly sales record for our pixel phones despite supply constraints and our cloud business continuing to grow strongly so cloud obviously a
Business uh segment for a lot of companies that has been growing pretty rapidly so that’s something we definitely want to take a look at so for revenues for the quarter ended december 31st fourth quarter 2021 was 75 billion dollars which was a 32 increase year over year from the fourth quarter last year of 57 billion dollars about and therefore for the full year of
2021 they had 257 billion dollars in revenues which was about a 41 increase from 182 billion dollars uh the year before and that’s a pretty substantial increase and it’s uh i think it is important to note that that 182 billion dollars in 2020 um it’s not like that was a big decrease from 2019 uh some people you if you didn’t know better you might think well the
Reason that the increase this year was so great was maybe because they were doing well in 2019 and then they were negatively affected by covet in 2020 so their numbers went down but no that’s not the case in 2020 their numbers still went up 13 which you know is lower than 41 percent but still increases in 2020 and then in 2021 their revenues grow grew 41 which is
Pretty awesome operating income was around 78 billion dollars with margin of that’s around 31 percent there uh which is up uh from 41 billion uh the year before so increasing income and margins which is awesome to see and net income for the year around 76 billion dollars uh which is close to double the 40 billion dollars uh from 2020. so that is pretty uh wild
To see that big increase there and then this kind of breaks it down by their segments so in 2021 the google search or sorry this is just the fourth quarter of 2021 uh google search and other brought in about 43 billion dollars of revenue youtube ads brought in 8.6 billion google network brought in about 9.3 billion and that brings their total for the advertising
Portion of their business to around 61 billion and then they just say other here which is 8 billion dollars of revenue and i’m thinking that other probably includes like phone sales pixels and maybe some other devices they sell and stuff like that and then some miscellaneous stuff and then their cloud business brought in about five and a half million dollars
Of revenue so the cloud business for them is definitely still a pretty small portion of the business at this point um but as we’ll see uh it’s definitely growing as we can see it grew from 3.8 billion in 2020 to 5.5 in 2021 so that’s you know over a 20 increase uh 20 over 25 increase even though it’s not that big of an increase uh by the numbers it’s a large
Percentage and the total acquisition cost for um these uh revenues this is traffic acquisition costs so i think that’s just for the cost of like the advertising portion of their business i would guess but i’m not really positive uh exactly what that means is 13 billion dollars so that uh right away takes away a chunk of their revenue um from basically having
To spend money to acquire those customers and that traffic that provides them advertising revenue and another cool thing i think is they hired 20 000 people in the past year which is just insane to think at 135 000 employees at the end of 2020 and 156 000 at the end of 2021 so seems like a pretty big increase and that’s a good sign to show that their business is
Growing uh from uh terms of an income perspective uh google services is really the only profitable portion of their business right now uh which is brought in about 26 billion dollars in income and then the google cloud and other like this miscellaneous stuff uh lost a few billion dollars so google cloud definitely getting closer to being profitable uh lost about
1.2 billion dollars in 2020 and only lost 890 million in 2020 20 2021 so it’s good to see hopefully they will be profitable this coming year but at this point we’re just looking for lots of growth in that segment as other companies continue to grow their cloud business as well so overall income in the fourth quarter of 21.88 billion dollars and then the big news
That i wanted to talk about was the stock split basically they announced the board of directors approved a 20 for one stock split and it’s obviously subject to shareholder approval but basically the stock price will be divided by 20 and then everyone will get 20 times as many shares as they have so we’ll look at the stock price later and talk about you know about
What the stock price would be after the split but now we’re going to look at some valuation metrics uh first thing here is the p e ratio and just comparing google’s historical p e ratio to where it is currently so over the past 10 years it’s really been in the 20 25 to 30 range uh for a lot of the time it looks like their earnings dropped off here in 2017 and
2018 so their p e ratio kind of spiked up there a little bit but that was a bit of an anomaly and then it has continued to stay pretty steady you can see the stock price has grown pretty rapidly but also the earnings have grown pretty rapidly too so currently the pe ratio is around 27.5 which i would say is pretty decent compared to the last 10 years it’s pretty
Much sort of on average where the p e ratio was at for google for the past 10 years and comparing their pe ratio to the overall sector there in the communication services sector and they’re within this interactive media business so this industry contains companies like google facebook you know snapchat doordash i think pinterest stuff like that so you know some
Of these other businesses in the maybe telecommunication services sector they probably have a lot lower p ratios and a lot slower growing than something like google so it’s not the absolute best comparison but looking within the industry can give us a really good idea as well since a lot of these companies are fairly similar to google so the overall average for
The sector is 20.74 but for the industry of interactive media that google is a part of the average is around 28 so honestly google is pretty much in line right now with the average for their industry uh just a slight bit below that at the moment but right about uh in line with where you know the overall market is valuing the companies in this industry at this
Point so we are going to take a look at a chart real quickly here as well just to try to get an understanding of the you know maybe a little bit more technical perspective on google and how the stock price has been trending and you know where we might want to enter so this is looking at two years so we can see you know before the pandemic they were down here
Around fifteen sixteen hundred dollars and you know they’re almost double that right now around twenty eight sixty five um and they reached up around three thousand thirty uh just a few days ago so it’s really interesting uh just to see all that growth and if we zoom in a little bit just to the one year one day chart uh we can see over the past six months you know
They’ve been trading you know right around this 50-day moving average here in this blue line uh just kind of going up and down below that moving average and slowly moving a little bit higher and all of that action has been in this you know maybe 27 to 2900 range a lot of it has been in there and so this range right here is pretty solid and it has a pretty large
Volume profile there so it’s probably going to be a fairly sticky price and it’s going to take a lot to move it significantly higher or lower than that but once it you know starts moving past that it could move fairly quickly so that’s one thing to keep in mind as well but something interesting over the past month or so they’ve been trending down probably with the
Rest of the market but they’ve reached below the 200-day moving average which is pretty interesting and uh the rsi at that time was you know below 30 there as well around 27 maybe so that definitely could have been a good buying opportunity from a technical level and they you know jumped back up right above the 50-day moving average and uh made that all-time high
There just a few days ago uh on february 2nd it looks like and then now again they’re right around that 50-day moving average so at this point not a bad price you know it’s pretty close to all-time highs but from a technical perspective it’s really not bad at all um you know the rsi has jumped up a fair bit to around 57 so that’s not great but it’s not terrible
As well and another thing to keep in mind is the stock split adjusted price so that will that adjusted price will be you know in the ballpark of maybe 125 to 150 dollars per share uh if the original price is three thousand a twenty for one stock split would put them at a hundred fifty dollars per share uh so that’s something to keep in mind you know be looking
For that i’m not exactly sure when that stock split is supposed to uh go through uh they might have mentioned it on that earnings report but i honestly forget so definitely i’m excited for that stock split and you know i know nothing fundamentally has changed with the business and i know nothing for me fundamentally has changed but a lot of companies at least
Bigger tech companies like this after they announced stock splits you know their stock price does see some pretty good growth after that and it could be some correlation there or some causation or none at all it’s really hard to say but it is an interesting trend that i think i’ve noticed for sure so it’ll be cool to see what happens with google so let me know
What you guys do think of google as a whole google after the stock split what you think about the current price and just want to thank you for sticking around to the end of the video and i’ll see you in the next one
Transcribed from video
Is Alphabet Stock Undervalued? | GOOGL Stock Analysis | Big News About Google Stock! By Frank Mularcik
