GOOG Stock Report

2-Year Price History

Ockham's Rating

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GOOG Revenue

For a long time, value investors have used the current share price relative to sales per share levels as an important valuation tool. We utilize a historical weighted average methodology that treats recent years more importantly in the calculation. When looking at GOOG through this framework, we can see that our weighted average historical high and low Price to Sales per share ratios over the last 6 years are 14.07x and 6.96x respectively.

Utilizing this range we can see that GOOG’s current Price to Sales per share ratio of 6.06x is significantly below its average levels historically. In fact, with a current price of $425.32, GOOG is a full 43% below its average Price to Sales ratio at comparable sales levels. This is a rare occurrence and, when taken in context of the other areas of our analysis, can be a strong positive for our outlook for GOOG.

GOOG Cash Earnings

As the old saying goes, "Cash is King!" However, we prefer to capture a few other items within our analysis to identify "cash earnings". Nevertheless, an analysis of Cash Earnings is absolutely pivotal to assessing a company's value, and currently GOOG is significantly below its historical average multiple of Cash Earnings. Looking at the last 6 years we can get a good understanding of what investors have grown to expect from GOOG. For example, GOOG's Cash Earnings ratio per share has fluctuated between 24.17 and 50.00 over this historical timeframe. This range is based upon a proprietary weighted methodology at Ockham, but can clearly show an investor where GOOG is with respect to prior business periods.

So with GOOG's current price (latest close of $425.32) and most recent level of Cash Earnings reported, we see significant opportunity from a value perspective. At its current price level, GOOG is 39% below its average level of Price to Cash Earnings on a historical basis. This means that investors were willing to pay for a much higher stock price than currently for the same level of Cash in the past, on a relative basis. There are a couple of important things to remember, however. First, value doesn't exist in a vacuum. So if the market doesn't recognize this value, even a great disparity in Price to Cash Earnings cannot force an immediate stock price reaction. Second, patience is key when looking at securities that have reached these levels of Price to Cash Earnings versus their historical norms. So be patient with GOOG.

GOOG Dividends

While it is not necessary to pay an attractive dividend or a dividend at all, to receive a positive rating from Ockham, we view dividends as an additionally helpful measure in determining the future potential of any company. While we do like to see companies with healthy and growing dividends, it is not appropriate for all companies, especially those focused on growth. In this regard, we regard GOOG as neutral because we do not have historical data for this company's dividends. We will being incorporating this into our analysis as soon as that data is available.