Google's Q2 Earnings Forecast
**Google will be reporting first quarter 2010 earnings after the closing bell on April 15th**
Here are the guidance estimates for Q2…
Q2 Revenue: $5.36 Bil
Q2 Basic EPS: $6.76
Income Statement | ||
Three Months Ended June 30, 2010 | ||
Revenue | $7,249,031 | |
Costs: | ||
TAC | $1,884,748 | $5,364,283 |
Cost of Revenue | $797,393 | |
Gross Margin | $4,566,890 | |
Operating Expenses: | ||
R&D | $751,863 | |
S&M | $630,503 | |
G&A | $489,346 | |
Total | $1,871,713 | |
Income from Operations | $2,695,177 | |
Investment Income | $110,107 | |
Income before Taxes | $2,805,283 | |
Provision for Income Taxes | $648,814 | |
Net Income | $2,156,469 | |
Basic EPS | $6.76 | |
As can be seen from the above income statement, I am expecting Google to post an overall revenue figure in the second quarter of $7.25 Bil, representing a 3.9% increase from my Q1 revenue estimates.
The publicized revenue figure is sitting at $5.36 Bil. This is factoring in Traffic Acquistion Costs (“TAC”) of 26%, which is right in line with each of the last four reported quarters. Current Street “consensus” is putting revenue at $4.93 Bil, with a range of $0.5 Bil! Thus, once again, I am forecasting revenue to be just above the upper range of analysts’ expectations.
Lastly, basic EPS is at $6.76 for the second quarter, up from my estimates of $6.61 for Q1. This is a lot higher than what the Street is currently expecting. Their estimates for Q2 EPS is at $6.45 with a range of $1.01!! Once again, this wide range clearly shows that analysts are very uncertain about the next few months. I happen to live in the Ozarks, where the weather can change dramatically from day-to-day. As a result, our weathermen have the most difficult time predicting what tomorrow's temperature will be with any accuracy. Ozarks weathermen remind me of Google’s analysts (with the exception of me, of course!).
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I’ll be adding a summary of my analysis for the “Every-Man” in the next few days. It will be a simple guide detailing what to expect from Thursday’s announcement, including what the possible stock price reactions could be in both after-hours trading and over the next few months. I’ll also try to get up a valuation model soon that will include my 1-year Price Target for the stock.
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Disclaimer:
· Opinions, estimates and projections contained in this report are of the author as of the date published and are subject to change without notice.
· This report is not, nor should it be construed as, an offer to sell or solicitation of an offer to buy any securities.
· Unless otherwise noted, all research reports provide information of a general nature and do not address the circumstances of any particular investor.
· Opinions, estimates and projections contained in this report are of the author as of the date published and are subject to change without notice.
· This report is not, nor should it be construed as, an offer to sell or solicitation of an offer to buy any securities.
· Unless otherwise noted, all research reports provide information of a general nature and do not address the circumstances of any particular investor.
why do u think stocked has been going down
ReplyDeletehow low and when will it start to rise
Great questions! Google shares have fallen for two main reasons. First, Google announced in their most recent quarterly report that both costs and expenses will continue to rise over the second quarter due to increased hiring, research and development (“R&D”), and mergers and acquisitions (“M&A”). Stock prices are simply the sum of the present values of the future quarterly EPS figures discounted at a particular rate. If investors feel that earnings will not be as high in the future as they previously estimated, then they begin selling the stock until the price once again reaches the sum of the present values. In the case of Google, I wholeheartedly believe that traders have overreacted to management’s comments about future costs. The fact is that Google has a load of cash that is not being fully utilized. This money should be spent on new product development and the acquisition of up-and-coming companies, which is exactly what management meant when they announced an increase in costs and expenses. The second reason why Google shares have fallen is due to macroeconomic factors—primarily the instability in certain European countries, like Greece.
ReplyDeleteIt is very difficult to say how low the stock could fall. However, if you are a true “investor,” meaning that you are in it for the long haul, occasional ups-and-downs should not be taken too seriously. I will say that if the stock ever fell to $500, I would be very tempted to buy it up. NOTE: I do not trade or invest in any of the stocks I follow due to possible conflicts of interest.
Given all of the macroeconomic factors occurring right now, I am very reluctant to give any timeline of when the stock will begin to rise. What I will say, however, is that barring any unforeseeable negative economic issue, I would wager that GOOG will be higher than its current price of $525 by its next quarterly announcement.
I hope I have fully answered your questions. Thanks for the comment!