Earnings Update: Alphabet Inc. (NASDAQ:GOOGL) Just Reported Its Second-Quarter Results And Analysts Are Updating Their Forecasts

Alphabet Inc. (NASDAQ:GOOGL) shareholders are probably feeling a little disappointed, since its shares fell 5.9% to US$167 in the week after its latest quarterly results. Alphabet reported US$85b in revenue, roughly in line with analyst forecasts, although statutory earnings per share (EPS) of US$1.89 beat expectations, being 2.3% higher than what the analysts expected. This is an important time for investors, as they can track a company's performance in its report, look at what experts are forecasting for next year, and see if there has been any change to expectations for the business. So we gathered the latest post-earnings forecasts to see what estimates suggest is in store for next year.

Check out our latest analysis for Alphabet

Taking into account the latest results, the current consensus from Alphabet's 49 analysts is for revenues of US$345.7b in 2024. This would reflect a satisfactory 5.3% increase on its revenue over the past 12 months. Per-share earnings are expected to rise 7.2% to US$7.63. In the lead-up to this report, the analysts had been modelling revenues of US$347.0b and earnings per share (EPS) of US$7.57 in 2024. The consensus analysts don't seem to have seen anything in these results that would have changed their view on the business, given there's been no major change to their estimates.

There were no changes to revenue or earnings estimates or the price target of US$204, suggesting that the company has met expectations in its recent result. The consensus price target is just an average of individual analyst targets, so - it could be handy to see how wide the range of underlying estimates is. The most optimistic Alphabet analyst has a price target of US$230 per share, while the most pessimistic values it at US$151. As you can see, analysts are not all in agreement on the stock's future, but the range of estimates is still reasonably narrow, which could suggest that the outcome is not totally unpredictable.

Another way we can view these estimates is in the context of the bigger picture, such as how the forecasts stack up against past performance, and whether forecasts are more or less bullish relative to other companies in the industry. It's pretty clear that there is an expectation that Alphabet's revenue growth will slow down substantially, with revenues to the end of 2024 expected to display 11% growth on an annualised basis. This is compared to a historical growth rate of 16% over the past five years. Compare this to the 123 other companies in this industry with analyst coverage, which are forecast to grow their revenue at 10% per year. Factoring in the forecast slowdown in growth, it looks like Alphabet is forecast to grow at about the same rate as the wider industry.

The Bottom Line

The most important thing to take away is that there's been no major change in sentiment, with the analysts reconfirming that the business is performing in line with their previous earnings per share estimates. Happily, there were no real changes to revenue forecasts, with the business still expected to grow in line with the overall industry. The consensus price target held steady at US$204, with the latest estimates not enough to have an impact on their price targets.

Following on from that line of thought, we think that the long-term prospects of the business are much more relevant than next year's earnings. We have forecasts for Alphabet going out to 2026, and you can see them free on our platform here.

Another thing to consider is whether management and directors have been buying or selling stock recently. We provide an overview of all open market stock trades for the last twelve months on our platform, here.

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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.

Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team@simplywallst.com