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GOOG, capital surging, but costs rising, a 10% higher target price
Current 2,929, Target 3,230, +10%
October 28th, 2021
1 minute read
Sales up 5%
Costs much higher
1 minute read
Sales up 5%
- Sales grew by 5% in the third quarter to 65,118 million dollars which is above our forecast 63,736 million dollars
- This brings the quarterly average growth to 9%
- We predict average growth of 5% in this next 12 months to bring sales to 77,011 million dollars in the third quarter of 2022.
Costs much higher
- The cash cost ratio was much higher at -69% in the third quarter but net profit increased slightly to 18,936 million dollars with lower non cash costs.
- The average quarterly cost ratio is now at -65%
- We use the latest -69% cost ratio to predict a 19,769 million dollar profit in the third quarter of 2021.
Cashflow lower
Balance sheet, higher leverage
Valuation, capital surging, a 10% higher target price
- Free cashflow was lower at 15,914 million dollars in the third quarter as investment spending increased to -6,819 million dollars.
- Average quarterly Cashflow is now at 15,814 million dollars.
- We assume the same -6,819 million dollars investment spending which with higher sales gives a 16,747 million dollarsCashflow in the third quarter of 2021.
Balance sheet, higher leverage
- Cash increased from 23,630 to 23,719 million dollars in the third quarter.
- Liabilities increased from 97,822 to 102,836 million dollars so net cash worsened from -74,192 to -79,117 million dollars.
- With our forecast cashflow & a -37,668 million dollars equity payout net cash will be -53,537 million dollars in 12 months time.
Valuation, capital surging, a 10% higher target price
- GOOG capital from the last six years increased to 122,277 million dollars in the third quarter & will rise to 179,020 million dollars in the next 12 months.
- At the current market value of 1,950,000 million dollars based on our forecasts it’s at 5.3X assets with a 4.9 years payback & a 2% yield.
- Our cashflow forecast is 63,248 million dollars which means a 31X valuation. At a 34 X valuation gives a 10% higher target price of 3,230 dollars.
