Alphabet trades at $364.69 and has moved in lockstep with the market. Its shares have returned 13% over the last six months while the S&P 500 has gained 11.7%.
Is now the time to buy GOOGL? Find out in our full research report, it’s free.
Why Are We Positive on GOOGL?
Started by Stanford students Larry Page and Sergey Brin in a Menlo Park garage, Alphabet (NASDAQ: GOOGL) is the parent company of the eponymous Google Search engine, Google Cloud Platform, and YouTube.
1. Skyrocketing Revenue Shows Strong Momentum
Alphabet proves that huge, scaled companies can still grow quickly. The company’s revenue base of $220.3 billion five years ago has doubled to $445.9 billion in the last year, translating into an incredible 15.1% annualized growth rate.
Alphabet’s growth over the same period was also higher than its big tech peers, Amazon (11.8%), Microsoft (14.6%), and Apple (6.1%). 
2. Operating Reveals a Well-Run Organization
Operating margin is the key profitability measure for Alphabet. It’s the portion of revenue left after accounting for all operating expenses — everything from the IT infrastructure powering online searches to product development and administrative expenses.
Alphabet has been a well-oiled machine over the last five years. It demonstrated elite profitability for a consumer internet business, boasting an average operating of 30.6%. A closer examination is required, however, because the company’s individual business lines have very different margin profiles.
3. Outstanding Long-Term EPS Growth
We track the long-term change in earnings per share (EPS) because it shows whether a company’s growth is profitable. It also explains how taxes and interest expenses affect the bottom line.
Alphabet’s EPS grew at 34% compounded annual growth rate over the last five years, higher than its 15.1% annualized revenue growth. This tells us the company became more profitable on a per-share basis as it expanded.
Final Judgment
These are just a few reasons why we think Alphabet is a high-quality business. At $364.69 per share (or 28.4× forward price-to-earnings), is now the right time to buy the stock? See for yourself in our full research report, it’s free.
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