Why Alphabet (GOOGL) Saw a Larger Drop Than the Broader Market Today

The recent trading session concluded with Alphabet (GOOGL) at a price of $195.60, reflecting a slight decrease of -0.26% from the previous day's closing value. This decline was more pronounced compared to the broader market, with the S&P 500 reporting a modest drop of just 0.04%. In contrast, the Dow Jones Industrial Average edged up by 0.07%, while the Nasdaq, which is known for its tech stocks, fell by 0.05%.

Over the past month, Alphabet's stock has demonstrated impressive growth, rising by 15.88%. This performance notably outpaces the Computer and Technology sector’s increase of 5.93% and the S&P 500’s growth of 1.05%.

Investors are particularly focused on Alphabet's upcoming earnings report. Analysts project the company’s earnings per share (EPS) to reach $2.12, marking a significant increase of 29.27% compared to the same quarter last year. Revenue is also expected to rise to $81.41 billion, which signifies a 12.57% increase compared to the previous year’s quarter.

For the full fiscal year, the Zacks Consensus Estimates anticipate an EPS of $8.02 and total revenue of $294.82 billion, representing year-over-year changes of +38.28% and +14.94%, respectively.

Furthermore, it's essential for investors to monitor any recent adjustments in analyst forecasts for Alphabet. Such revisions often reflect current business trends, with positive estimate updates generally indicating a favorable business outlook for the company.

Research indicates that these estimate modifications have a direct correlation with near-term stock performance. To capitalize on this insight, the Zacks Rank system offers an exclusive rating model that evaluates these changes and generates actionable ratings.

The Zacks Rank scale ranges from #1 (Strong Buy) to #5 (Strong Sell), and it has a proven track record, independently audited, showing that #1 stocks have delivered an average annual return of +25% since 1988. Notably, there have been no adjustments in the Zacks Consensus EPS estimate for Alphabet over the past month, and the company currently holds a Zacks Rank of #3 (Hold).

From a valuation standpoint, Alphabet’s current Forward P/E ratio stands at 24.45, which is slightly lower than its industry’s Forward P/E of 24.54.

Alphabet also has a PEG ratio of 1.39, which provides insight on earnings growth relative to its P/E ratio. For context, the Internet - Services industry has an average PEG ratio of 2.06, suggesting that Alphabet could be fairly valued based on its growth prospects.

As a segment of the Computer and Technology sector, the Internet - Services industry currently holds a Zacks Industry Rank of 36, placing it in the top 15% among over 250 industries. The Zacks Industry Rank assesses the overall strength of industry groups based on the average Zacks Rank of their individual stocks. Historical data indicates that stocks in industries ranked in the upper half consistently outperform those in the lower half by a factor of two to one.

For those interested in tracking stock performance metrics, platforms like Zacks.com can provide valuable insights as trading progresses in the following sessions.

Alphabet, Stocks, Earnings