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GOOG, a 13% higher target price
Current, target price 2,838, 3,194 (+13%)
September 13th, 2021
1 minute read
Sales jump
Costs flat
1 minute read
Sales jump
- Sales jumped 12% in the second quarter to 61,880 million dollars which is above our forecast 58,080 million dollars.
- Average quarterly growth is 13%.
- We assume average growth is 4% in this next 12 months to bring sales up to 71,956 million dollars in the second quarter of 2022.
Costs flat
- The cash cost ratio was flat at -63% in the second quarter & profit increased to 18,525 million dollars.
- Average quarterly costs are -64%.
- We use the same -64% costs to predict a 22,838 million dollars profit in the second quarter of 2022.
Cashflow up strongly
Balance sheet, higher leverage
Valuation a 13% higher target price
- Cash increased from 14,580 to 17,265 million dollars with lower investment spending of -5,496 million dollars.
- Average quarterly cashflow is 14,546 million dollars.
- Assuming the same -5,496 million dollars investment with the higher sales gives a 20,756 million dollars cashflow in the second quarter of 2022.
Balance sheet, higher leverage
- Cash declined from 26,622 to 23,630 million dollars in the second quarter.
- Liabilities increased from 97,082 to 97,822 million dollars so net cash worsened from -70,460 to -74,192 million dollars.
- With our forecast higher cashflow & a -43,448 million dollars equity payout, net cash will be -39,072 million dollars in 12 months time.
Valuation a 13% higher target price
- GOOG capital from the last six years increased to 107,023 million dollars in the second quarter & will be 168,616 million dollars in 12 months time.
- At the current value of 1,885,000 million dollars, based on forecasts, it’s at 5.2X assets with a 2% yield.
- Our cashflow forecast is 78,567 which is a 24X valuation. At 27X gives a 13% higher target price of 3,194.
