Sunday, March 1, 2015

Analysis of Google 2015


Google, an American internet company

Company: Google

ISIN US38259P5089 | WKN A0B7FY

Business: An American service and internet company. They offer a broad range of products under eight headings: Web (Web search, Google chrome), Mobile (Mobile, maps for mobile), Media (Books, Image search), Geo (Maps and Earth), Specialized Search (Scholar, Trends), Home & Office (Gmail, Drive), Social (Google+, Blogger) and finally Innovation (Code).

Active: World wide

P/E: 26.6

Here you can find the previous analysis of Google.

contrarian values of P/E, P/B, ROE as well as dividend for Google

The P/E of Google is far, far too high for me with 26.6 and the P/B is also no joy to see with 3.7 which gives a clear no go from Graham. The earnings to sales are excellent with 29% but the ROE is disappointingly low for a non dividend payer such as Google. The book to debt ratio is very high (too high?) with 3.9 which has an impact on ROE. In the last five years they have had an insane yearly growth rate of 17.6%! This then gives us a motivated P/E of 37 to 43 which means that Google is still undervalued on the market.
They spend a high amount of money on research and are now up at 68% of their earnings which is very high but I assume that they need that to step into manufacturing and future large increases of revenue.
They pay no dividend which I do not like.

Conclusion: Graham says no and I could invest in Google due to their large book value, excellent growth rate and relatively speaking fair P/E to that growth. There are some concerns... in the last years their revenue growth is not as impressive (around 10%) and as a customer... with many products I am not so pleased and I have therefore stopped using them since too much greed was present. Not that long ago I finished reading a book concerning Google. It was nice in the beginning but then it become pretty revolting how they were padding themselves on the shoulders telling themselves how good they were. Anyway... they make tons of money and I would have no real fear owning them for the long run especially since even Tim Cooks says that his biggest competitor is Google. They did however get kicked out from the Stocks of Interest list since they start to be too close to full valuation.

If this analysis is outdated then you can request a new one.

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