Alphabet Inc. (GOOGL)
Valuation Overview•Is Alphabet Inc. Overvalued or Undervalued?
Priced at a premium to peer multiples and intrinsic cash flows, demanding strong execution to justify current levels.
High-quality fundamentals with a strong composite quality score of 95/100, backed by robust profitability and solvency.
Analysts remain bullish, forecasting further upside expansion with consensus targets suggesting solid gains.
Verdict: Elite compounder with fortress-level fundamentals across every core pillar.
Wall Street is broadly bullish, projecting solid upside with steady expected earnings growth. However, capital return yields remain modest, driven predominantly by aggressive share repurchases.
GOOGL exhibits elite business quality, driven by exceptional capital efficiency and highly lucrative margins (highlighted by a massive 25.1% ROIC). This is supported by a highly conservative balance sheet featuring strong liquidity and pristine Altman Z safety.
The company demonstrates solid revenue growth (12.5% 3Y CAGR) paired with highly explosive earnings growth (33.3% EPS 3Y CAGR). This growth is supported by elite operational efficiency, sustaining an impressive 32.7% operating margin.
| Financial Metric | Trend (12Q) | Latest Qtr | 1Y Growth | 3Y CAGR | 5Y CAGR | 10Y CAGR |
|---|---|---|---|---|---|---|
| Revenue | $109.9B | +15.1% | +12.5% | +17.2% | +18.3% | |
| EBITDA | $46.2B | — | +19.4% | — | — | |
| Net Income | $62.6B | +32.0% | +30.1% | — | +23.2% | |
| EPS (Diluted) | $5.11 | +34.5% | +33.3% | +29.8% | +25.2% | |
| Free Cash Flow | $19.0B | +0.7% | +6.9% | +11.3% | — |
| Metric | TTM | 3Y Avg | 5Y Avg | 10Y Avg |
|---|---|---|---|---|
| Gross Margin | 60.4% | 58.2% | 57.4% | 57.2% |
| Operating Margin | 32.7% | 30.5% | 29.7% | 26.2% |
| Net Margin | 37.9% | 28.5% | 27.2% | 23.5% |
| FCF Margin | 17.3% | 20.5% | 21.8% | 21.8% |
| Quarter | EPS Est. | EPS Act. | Surprise | EPS | Rev |
|---|---|---|---|---|---|
| Q2'26Latest | $2.64 | $5.11 | +93.6% | ||
| Q1'26 | $2.57 | $2.82 | +9.7% | ||
| Q4'25 | $2.30 | $2.87 | +24.8% | ||
| Q3'25 | $2.15 | $2.31 | +7.4% | ||
| Q2'25 | $2.02 | $2.81 | +39.1% | ||
| Q1'25 | $2.12 | $2.15 | +1.4% | ||
| Q4'24 | $1.85 | $2.12 | +14.6% | ||
| Q3'24 | $1.84 | $1.89 | +2.7% |
Total return is +112.8% (1Y), outperforming the benchmark by +87.8%
| Period | Total Return | vs S&P 500 (Alpha) | Dividend Contribution |
|---|---|---|---|
| YTD | +16.9% | +7.6% | — |
| 1Y | +112.8% | +87.8% | +0.5% |
| 3YCAGR | +44.3% | +24.2% | +1.5% |
| 5YCAGR | +25.2% | +12.1% | +1.5% |
| 10YCAGR | +26.5% | +12.7% | — |
The S&P 500 is at 31.3x trailing P/E — Expensive relative to historical averages.
Quick answers to common questions about Alphabet Inc. (GOOGL) valuation, health, and returns.
Alphabet Inc. is estimated to be overvalued under our discounted cash flow framework. relative multiples indicate the stock is Slightly expensive versus peers compared to industry peers. overvalued (implying -31.7% downside from DCF intrinsic value of $251.37)
Alphabet Inc. has multiple valuation anchors: DCF Intrinsic Value: $251.37 | Peer Relative Fair Value: $326.26 | Wall Street Analyst Target: $411.80 (implying +11.9% upside). A convergence of these signals offers higher conviction.
Alphabet Inc. displays excellent financial health with a composite quality score of 95/100, supported by a Altman Z-Score of 17.1 (safe zone), Piotroski F-Score of 7/9, Return on Invested Capital (ROIC) of 25.1%.
Alphabet Inc. pays a 0.2% dividend yield, covered by a 8% payout ratio with 2 years of growth, supplemented by a 1.0% buyback yield.
Alphabet Inc.'s current growth trajectory is Accelerating. The company achieved +15.1% 1Y revenue growth and +34.5% 1Y EPS growth, compared to its 3Y revenue CAGR of +12.5%.
Wall Street consensus is Buy based on 83 analysts, beating EPS expectations in 100% of recent quarters with a 13-quarter streak. The consensus price target represents a +11.9% change from current levels.
Investment risks for Alphabet Inc. include: -20.4% 1-year max drawdown. Volatility risk is characterized by a beta of 1.30x.
No. These computations are purely quantitative model outputs for informational purposes. They do not account for qualitative management shifts or macro events. Always consult a licensed RIA before buying or selling shares.
Disclaimer: This page is for informational purposes only and does not constitute financial advice. All valuation models, scores, and target estimates are automated computations under stated assumptions and should not be relied upon as the sole basis for any investment decision.