What’s Alphabet’s Valuation?



A look at Alphabet’s enterprise value and related multiple

Alphabet (GOOG) posted an enterprise value (or EV) of $633.2 billion for 2017.

In comparison, Alibaba (BABA), Amazon (AMZN), Facebook (FB), and PayPal (PYPL), Alphabet’s peer companies in the Internet sector, have enterprise values of $437.4 billion, $563.9 billion, $474.5 billion, and $83.6 billion, respectively.

How does Alphabet’s EV compare with its adjusted EBITDA (adjusted earnings before interest, tax, depreciation, and amortization) for the last 12 months? The company’s EV-to-adjusted EBITDA for the trailing 12 months computes to 18.4x in comparison to the EV-to-EBITDA of 14.4x expected in 2018. Alphabet’s EBITDA margin for 2017 is 33%.

A further look at the company’s EV ratios shows that EV-to-sales for the trailing 12 months is 6.1x, and that EV-to-sales anticipated for 2018 is 4.8x.

Moreover, the company’s trailing-12-month EV-to-cash-flow was 17.5x in comparison to its trailing 12-month EV-to-free-cash-flow of 26.1x.

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Eye on Alphabet’s price multiple

Alphabet’s book value per share works out to $226.5, while its estimated book value per share is $218.1. The stock is trading at a price-to-book value of 4.7x. The company’s price to sales is 7.0x for 2017 and the estimated price to sales for 2018 is 6.6x.

Market capitalization

Alphabet was the largest Internet player in terms of market capitalization globally at ~$730.9 billion. In comparison, peers Alibaba, Amazon, Facebook, and PayPal have market capitalizations of ~$441.3 billion, ~$571.6 billion, ~$517.0 billion, and ~$89.2 billion, respectively.

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Moving averages

On December 29, 2017, Alphabet closed the trading day at $1,046.40. Based on this figure, here’s how the stock fared in terms of its moving averages:

  • 10.4% above its 100-day moving average of $948
  • 1.8% above its 50-day moving average of $1,028
  • 0.23% above its 20-day moving average of $1,044

EBIT on interest coverage ratio

Can Alphabet easily pay interest on its outstanding debt? The answer lies in examining the company’s EBIT on interest ratio, also called the interest coverage ratio, which in this case is 1,079.2x.

As for debt on economic value of the company, Alphabet has debt on enterprise value of 1%.


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