Alphabet earnings: Google juggles good investments with being a target for EU fines

Google’s parent company beat analysts’ quarterly earnings estimates by an average of about 27% last year, and never by less than 17.5% in any of the four quarters, according to FactSet records. Those beats were fueled not by actual money flowing into the company for ads sold on Google or any of Alphabet’s GOOGL, +0.80% GOOG, +0.69% myriad other businesses, but rather paper profit on investments the company has made. It also ignores huge fines Google expects to pay the European Commission.

Alphabet has already said that it will realize its latest European fine — a $1.7 billion penalty for online-advertising practices that was announced in March — in this quarter’s earnings report. Alphabet Chief Accounting Officer Amie Thuener said in an announcement that fine will be part of the GAAP accounting, but will also be broken into its own expense line.

“The Lyft LYFT, +1.60% IPO should also result in a meaningful investment gain in 1Q ,” Stifel analyst Scott Devitt noted. Revenue: Alphabet is expected to post first-quarter revenue of $30.04 billion after accounting for traffic-acquisition costs, according to analyst estimates. Estimize contributors on average project $30.18 billion. The company reported ex-TAC revenue of $24.86 billion a year ago.

“Despite more signs of increased industry regulation on the horizon, a healthy appetite for higher taxes in Europe, another congressional testimony, a constant flow of unflattering media reports, another European Commission fine, the discovery of an undisclosed microphone in Nest Secure devices and a growing chorus to break up the company, Alphabet has remained busy on the innovation front this year,” summed up Monness Crespi Hardt analyst Brian White, who has a buy rating and a $1,315 price...

“Alphabet is prioritizing platform investment over harvesting earnings, and we expect technology, product, and head count will continue to outgrow revenues,” wrote Baird Research analyst Colin Sebastian, who has an outperform rating and $1,380 price target on the stock.Stifel’s Devitt, though, said that he expects margins to stabilize in 2019 as some costs normalize, and expects to revisit his valuation after this report. Currently, Devitt rates Alphabet a buy with a $1,287 price target.

My thought $GOOGL $1500 after ER.

Google prices$1500 Soon.

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