Looking at Alphabet’s Valuation Multiples


Apr. 6 2018, Updated 8:14 a.m. ET

What’s Alphabet’s economic value?

Alphabet boasts a total EV (enterprise value) of $608.2 billion. In comparison, Internet sector peers Facebook (FB), Amazon (AMZN), Alibaba (BABA), and Baidu (BIDU) have EVs of $411.8 billion, $686.9 billion, $443.8 billion, and $72.9 billion, respectively.

Alphabet has a TTM (trailing-12-month) EV-to-adjusted EBITDA (adjusted earnings before interest, tax, depreciation, and amortization) ratio of 17.0x. Its EV-to-EBITDA ratio for 2018 is projected to be 11.8x. Alphabet’s EBITDA margin for 2017 was 32%.

Its TTM EV-to-sales ratio is 5.5x, and its EV-to-projected sales ratio for next year is 3.9x. The company’s TTM EV-to-cash flow ratio was 16.4x, and its TTM EV-to-free cash flow ratio was 25.4x.

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Understanding Alphabet’s earnings and sales

Alphabet’s 2017 EPS (earnings per share) of $32.45 stemmed from total revenue of $110.9 billion. Revenue was up 23%. In 2018, revenue is expected to be $156.6 billion, and EPS of $41.40 are expected.

Relative strength index

Alphabet has a 14-day RSI (relative strength index) score if 28, whereas Facebook’s, Amazon’s, Alibaba’s, and Baidu’s RSI scores are 22, 32, 36, and 23, respectively.

How much debt is Alphabet carrying?

Alphabet’s balance sheet reflects total debt of $3.9 billion and total capital of ~$156.5 billion, which works out to a total debt-to-total capital ratio of 2.5%.The company’s debt-to-assets, debt-to-equity, and debt-to-EBITDA ratios work out to 0.02, 2.6, and 0.11, respectively. Alphabet has an interest coverage ratio of 1,090.9x.


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