Alphabet Inc Q2 Earnings Still Beat Expectations

Tech behemoth Alphabet Inc (NASDAQ: GOOGL; GOOG) reported Q2 2017 earnings after the market closed today with results beating expectations. Revenue rose about 21% to $26.01 billion as Google’s ad revenue, which accounts for a lion’s share of its business, rose 18.4% to $22.67 billion on robust demand for advertising on mobile and the company’s popular video service YouTube. Google’s traffic acquisition costs (TAC), what it pays partner websites to carry ads, was up 28% to $5.09 billion. Net income fell to $3.52 billion from $4.88 billion as the Companyrecognized a non-deductible $2.74 billion European Union fine in its results whichlowered profit. The CFO commented:

“With revenues of $26 billion, up 21% versus the second quarter of 2016 and 23% on a constant currency basis, we’re delivering strong growth with great underlying momentum, while continuing to make focused investments in new revenue streams.”

Alphabet Inchas been in our Elite Opportunity Pro (EOP) portfolioin the past withour newsletter noting the last time around:

We’re going to go ahead and add Apple (AAPL), Google (GOOGL) and Amazon (AMZN) to our long-term list today with no suggested stop losses. Why no SSL’s? Because they are pretty much buy and hold forever type ideas. Meaning, picking up quality names like this for the long haul should end up proving extremely profitable over the next several years. It doesn’t mean they can’t go lower, it just means nothing has changed fundamentally with any of these companies in recent days, suggesting they offer better value now than before.

Our SCN EO newsletterhas alsopointed out:

I honestly believe when it’s all said and done, YouTube could end up becoming Alphabet’s (GOOGL) biggest asset of all. You can think about search, driverless cars, social media, and whatever else anyone can come up with, but at the end of the day, when we consider all Alphabet has to offer compared to the likes of an Amazon or an Apple, and one considers they haven’t even gotten around to YouTube fully yet, if you’re going to own one stock for the next ten to twenty years, I’d make it Alphabet (GOOGL). It’s that simple.

A technical chart for Alphabet Inc shows an uptrend from November until June with some uncertainty since then:

A long term performance chart shows Alphabet Inc being in a relatively steadyuptrend compared withsearch engine peerslike Yahoo! Inc (NASDAQ: YHOO), China basedBaidu Inc (NASDAQ: BIDU) and Russiafocused mid cap Yandex NV (NASDAQ: YNDX):

Finally, here is a quick recap oflarge cap Alphabet Incs recent earnings history along with EPS estimate trends from the Yahoo! Finance analyst estimates page going into the current earnings report:

Earnings History6/29/20169/29/201612/30/20163/30/2017
EPS Est. 8.03 8.64 9.67 7.39
EPS Actual 8.42 9.06 9.36 7.73
Difference 0.39 0.42 -0.31 0.34
Surprise % 4.90% 4.90% -3.20% 4.60%
EPS TrendCurrent Qtr. (Jun 2017)Next Qtr. (Sep 2017)Current Year (2017)Next Year (2018)
Current Estimate 4.83 8.43 31 40.12
7 Days Ago 8.25 8.44 34 40.42
30 Days Ago 8.23 8.43 33.91 40.46
60 Days Ago 8.22 8.4 33.88 40.41
90 Days Ago 8.05 8.29 33.26 39.17