Alphabet Inc. (NASDAQ: GOOGL) has confirmed that it will report its Q4 2021 earnings on Tuesday, February 1, 2022.
What to look for
The company's shares have lost 8% year to date, and investors will be keen on how it performs on its cloud platform. The segment that has been instrumental to the company's growth, and if the company performs well, it will help the stock rebound.
Earnings: Stockearning’s Estimated EPS for Q4 2021 will be $29.41 per share, beating consensus estimates of $27.41 per share. Google reported a slight increase in net income margin in 2020, and the figure is expected to increase in fiscal 2021, with the company expecting EPS of $111.6 for the full year. Historical EPS Performance for the past 12 quarters shows that the company has topped estimates 10 times (83%) and missed twice (16%).
Revenue: The company is expected to report revenue of $72.09 billion in Q4 2021 above consensus estimates of $69.5 billion. The Google Cloud segment ad YouTube Ad segment revenue will continue driving results. The company reported full-year revenue of $182.5 billion in the previous year, driven by growth in the two segments.
Stock Revenue: GOOGL shares have lost 4.3% since the company released its third-quarter earnings. Interestingly, GOOGL shares have been UP 20 times out of the past 32 quarters. So, the historical price reaction suggests a 62% probability of the share price going UP once the company reports its fiscal Q4 2021 earnings. According to the Stockearning algorithm, the predicted first-day move is 4%, while the predicted move on the seventh day is 5%.
What analysts are saying
Credit Suisse analyst Stephen Ju slashed his price target on GOOGL shares from $3,450 to $3,400 and maintained a Buy rating on the shares. In a research note, the analyst told investors that the launch of the infinite scroll in October 2021 and the resulting managed ad volume rise was a major driver of what will be a good Q4 print.
AB Bernstein analyst Mark Shmulik slashed his price target on the stock from $3,350 to $3,250. The analyst indicated that most of the company’s revenue growth drivers are likely to witness incremental headwinds in 2022. Weaker e-commerce revenue will impact search ad revenue, YouTube will face competition from TikTok, and cloud growth could need additional investment. Shmulik added that the company’s margin performance in 2021 was phenomenal, but investors should be ready for a decline. The analyst said that hiring ramps, investments in VR/AR, and acquisition of new buildings suggest that the company is opening its pockets following recent caution. Cloud and YouTube will experience softness with margins being under some pressure considering hiring, but all that has been telegraphed well.
BofA analyst Justin Post raised his price target on GOOGL from $3,210 to $3,470 and maintained a Buy rating on the shares. The analyst predicts a slowdown in search growth in 2022, compared to the 41% rise predicted in 2021. However, he believes Google is still in the initial stages of using machine learning and artificial intelligence tech over its ad stack. In a research note, Post assures investors that these new projects, like Performance Max, "can continue to produce strong search revenue growth." Furthermore, the analyst notes that momentum for YouTube Shorts "appears strong." The predicted YouTube commercialization of $10.92 per user, according to Post, "still seems early" and ought to benefit from the continuous decrease in Television ratings and change in spending.
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