Google Earnings: Analysis of Q2 Performance & Alphabet Stock

Google Earnings: Alphabet (GOOG) Google's parent company, reported earnings after the market close today, July 24, 2017. According to Bloomberg, Wall Street expected GAAP EPS of $4.46 per share on revenue of $20.9 billion. For a high-level summary of Google's earnings, see the list below regarding the Q2 report:

  • Q2 EPS (Diluted Net Income per Share): $5.01 per share including EU fine
  • Adjusted Q2 EPS (Adjusted Net Income Per Share): $8.90 per share excluding EU fine
  • Google's Q2 Revenue: $26 billion including the EU fine

In the company's second quarter report, the CFO made the following statement to investors:

With revenues of $26 billion, up 21% versus the second quarter of 2016 and 23% on a constant currency basis, we're delivering strong growth with great underlying momentum, while continuing to make focused investments in new revenue streams. Ruth Porat, CFO of Alphabet

Effect of Fine by EU Officials on Google Earnings

Assuredly, Alphabet shareholders experienced significant volatility this year. This year, YouTube advertisers withdrew advertisements from the platform after discovering ads playing next to videos promoting hate and terror.

Last month, EU regulators fined Alphabet $2.7 billion after accusing the company of promoting its own shopping services over competitors in search results. Unfortunately, the EU ruling opens the door to its competitors taking additional legal action over the allegations. Of course, Google is not the only American tech company to face such allegations by EU regulators. However, this recent, record-breaking fine surely sets a precedent for tech companies going forward, and Alphabet shareholders should be concerned by such bold governmental pressures in the EU business environment.

Nonetheless, Google maintained significant growth in its operating performance compared to previous periods. Therefore, the stock appears fairly valued and we will retain from adding it to either our Bullish List or our Bearish List.

Eric Bruin

Eric Bruin

Founder. Kelley School of Business ’17. Write about stocks and business news. Contact for business inquiries or to write articles for The Stock Trader Blog.

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