Tech heavyweight and Google parent Alphabet is due to release its quarterly earnings report for Q3 2018 on Thursday, after US markets close. The consensus recommendation for the firm is a “buy”, in line with the average recommendation for the Online Services peer group.
The California-based technology titan is projected to report earnings per share (EPS) of $10.42 for the third quarter, according to estimates submitted by 34 analysts to Thomson Reuters. These projections range from $9.20 for the most bearish analyst, to $11.90 for the most bullish one. During the past four weeks, the consensus EPS estimate has fallen from $10.46 per share to $10.42 now, with seven analysts revising their forecasts lower and one higher.
Still, should the company’s bottom line match the consensus projection, that would imply an increase of 8.9% from the equivalent quarter of 2017, when it earned $9.57 per share. Alphabet is the world’s fourth-largest corporation by market capitalization (behind Apple, Amazon, and Microsoft in that order). In the preceding four quarters, it has exceeded the consensus earnings estimate twice, but fell short of it two times as well.
Another area of interest for investors will be gross and net revenues – with the difference between them representing the firm’s profit margin. On a category basis, the focus may fall mainly on the performance of Alphabet’s advertising business, which remains its largest revenue stream by far, accounting for 86% of all money in.
Beyond that, markets may look at “other revenues”, this being the section that includes the Google Play Store (apps), Google Cloud computing services, and hardware such as smartphones and tablets. While this category is still dwarfed by advertising, it has been growing at a rapid pace and will likely hold greater importance over time, particularly considering the extraordinary potential of projects like self-driving car technology Waymo, which are set to be rolled out soon.
In case of a beat in the earnings numbers, Alphabet’s stock could recover some of its latest losses. A first line of resistance to advances may come near the crossroads of the stock’s 200-day simple moving average (SMA) – currently at $1137 – and the $1147 hurdle, marked by the highs of October 17. An upside break could open the way for a test of the October 2 peaks of $1225, provided the bulls can pierce above the 100-day SMA at $1186 first.
On the flipside, a disappointment in the quarterly figures could bring the stock under renewed selling interest, with the October 18 lows near $1086 potentially providing preliminary support to declines. A downside break may see scope for a test of the $1063 zone, defined by the troughs of May 29, with even steeper downside moves likely to stall around the six-month lows of $1007.
Note that the firm’s management will hold a conference call with analysts after the release of the earnings data, and any major announcements or guidance updates by the executives have the capacity to lead to movements in the company’s stock price as well. Of particular interest will be any remarks on regulation, against the backdrop of growing calls for greater government oversight in the tech sector. Congress has already held a few hearings on the matter, and interestingly, Google CEO Sundar Pichai is scheduled to speak before lawmakers after the midterm elections in November.
Alphabet is an S&P 500 and a Nasdaq 100 component stock. Year-to-date and ahead of Wednesday’s US market open, the company’s stock is up by 5.8%, outperforming the S&P 500 that is up by a mere 2.5% this year, but lagging behind the Nasdaq 100, which is higher by 11.3% in 2018.
Finally, other major firms releasing earnings on Thursday include Twitter, which will report its numbers before US markets open. Meanwhile, Amazon and Intel will publicize their own figures after the market close, alongside Alphabet.
Tech heavyweight and Google parent Alphabet is due to release its quarterly earnings report for Q3 2018 on Thursday, after US markets close. The consensus recommendation for the firm is a “buy”, in line with the average recommendation for the Online Services peer group.
The California-based technology titan is projected to report earnings per share (EPS) of $10.42 for the third quarter, according to estimates submitted by 34 analysts to Thomson Reuters. These projections range from $9.20 for the most bearish analyst, to $11.90 for the most bullish one. During the past four weeks, the consensus EPS estimate has fallen from $10.46 per share to $10.42 now, with seven analysts revising their forecasts lower and one higher.
Still, should the company’s bottom line match the consensus projection, that would imply an increase of 8.9% from the equivalent quarter of 2017, when it earned $9.57 per share. Alphabet is the world’s fourth-largest corporation by market capitalization (behind Apple, Amazon, and Microsoft in that order). In the preceding four quarters, it has exceeded the consensus earnings estimate twice, but fell short of it two times as well.
Another area of interest for investors will be gross and net revenues – with the difference between them representing the firm’s profit margin. On a category basis, the focus may fall mainly on the performance of Alphabet’s advertising business, which remains its largest revenue stream by far, accounting for 86% of all money in.
Beyond that, markets may look at “other revenues”, this being the section that includes the Google Play Store (apps), Google Cloud computing services, and hardware such as smartphones and tablets. While this category is still dwarfed by advertising, it has been growing at a rapid pace and will likely hold greater importance over time, particularly considering the extraordinary potential of projects like self-driving car technology Waymo, which are set to be rolled out soon.
In case of a beat in the earnings numbers, Alphabet’s stock could recover some of its latest losses. A first line of resistance to advances may come near the crossroads of the stock’s 200-day simple moving average (SMA) – currently at $1137 – and the $1147 hurdle, marked by the highs of October 17. An upside break could open the way for a test of the October 2 peaks of $1225, provided the bulls can pierce above the 100-day SMA at $1186 first.
On the flipside, a disappointment in the quarterly figures could bring the stock under renewed selling interest, with the October 18 lows near $1086 potentially providing preliminary support to declines. A downside break may see scope for a test of the $1063 zone, defined by the troughs of May 29, with even steeper downside moves likely to stall around the six-month lows of $1007.
Note that the firm’s management will hold a conference call with analysts after the release of the earnings data, and any major announcements or guidance updates by the executives have the capacity to lead to movements in the company’s stock price as well. Of particular interest will be any remarks on regulation, against the backdrop of growing calls for greater government oversight in the tech sector. Congress has already held a few hearings on the matter, and interestingly, Google CEO Sundar Pichai is scheduled to speak before lawmakers after the midterm elections in November.
Alphabet is an S&P 500 and a Nasdaq 100 component stock. Year-to-date and ahead of Wednesday’s US market open, the company’s stock is up by 5.8%, outperforming the S&P 500 that is up by a mere 2.5% this year, but lagging behind the Nasdaq 100, which is higher by 11.3% in 2018.
Finally, other major firms releasing earnings on Thursday include Twitter, which will report its numbers before US markets open. Meanwhile, Amazon and Intel will publicize their own figures after the market close, alongside Alphabet.
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