Alphabet has been on fire lately. In the past six months alone, the company’s stock price has rocketed 46%, setting a new 52-week high of $403.66 per share. This was partly due to its solid quarterly results, and the run-up might have investors contemplating their next move.
Following the strength, is GOOGL a buy right now? Or is the market overestimating its value? 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 shows that fast growth and massive scale can coexist despite conventional wisdom. The company’s revenue base of $196.7 billion five years ago has more than doubled to $422.5 billion in the last year, translating into an incredible 16.5% annualized growth rate.
Alphabet’s growth over the same period was also higher than its big tech peers, Amazon (12.1%), Microsoft (14.8%), and Apple (6.8%). 
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 30.4%. 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 28.4% compounded annual growth rate over the last five years, higher than its 16.5% 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 Alphabet is a high-quality business worth owning, and with the recent surge, the stock trades at 30.9× forward price-to-earnings (or $403.66 per share). Is now a good time to buy despite the apparent froth? See for yourself in our comprehensive research report, it’s free.
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