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A Look at Alphabet’s Valuations and Multiples

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Alphabet’s enterprise value and related multiples

Alphabet’s (GOOG) enterprise value (or EV) for 2017 is $587.9 billion. In comparison, Amazon (AMZN), eBay (EBAY), PayPal (PYPL), and Alibaba (BABA)—Alphabet’s peer companies in the Internet sector—reported enterprise values of ~$455.0 billion, $42.4 billion, $80.3 billion, and $442.8 billion, respectively.

Alphabet’s EV-to-adjusted-EBITDA[1. earnings before interest, tax, depreciation, and amortization] multiple for the trailing 12 months is 18.3x. That metric compares with its EV-to-EBITDA multiple of 13.5x expected in 2018. Alphabet’s EBITDA margin for 2017 is 32.0%.

A further look at the company’s EV ratios shows that its EV-to-sales multiple for the trailing 12 months is 5.9x, and its EV-to-sales multiple anticipated for 2018 is 4.6x.

Moreover, its trailing 12-month EV-to-cash flow multiple was 16.2x, compared with its trailing-12-month EV-to-free cash flow multiple of 23.3x.

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EBITDA measures

Alphabet’s 2017 EBITDA of $32.2 billion was down 16%. Wall Street is looking for EBITDA of $43.5 billion for the next period. Alphabet stock is trading at price-to-EBITDA multiple of 21.1x.

Alphabet’s price multiple

Alphabet’s book value per share works out to $214.30, while its estimated book value per share is $215.50. The stock is trading at a price-to-book value of 4.6x.

The company’s price-to-sales multiple is 6.9x for 2017, and its estimated price-to-sales multiple for 2018 is 6.3x.

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Market capitalization

Alphabet was the largest global Internet player in terms of market capitalization at ~$678.4 billion. Its peers’ market caps follow:

  • Amazon: ~$498.8 billion
  • eBay: ~$38.4 billion
  • PayPal: ~$84.4 billion
  • Alibaba: ~$444.9 billion

Earnings and sales

Alphabet reported EPS (earnings per share) of $28.30 in 2017, while its earnings per share for 2018 are forecast to be $30.60.

The company’s EPS for 2017 came on total sales of $99.3 billion, which grew 21% annually. Its sales for 2018 are expected to expand to $128.3 billion.

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