Analysis Brief
Last updated: Aug 29, 2025 12:47:44
Alphabet Inc. (GOOGL) - Concise Stock Analysis
Quarter-by-Quarter Highlights (last 4 quarters)
-
Q2 2025
- Revenue: $96.43 B (up ≈ 4 % YoY)
- Net income: $28.20 B; EPS ≈ $2.33
- Operating margin: 32.4 %; Net margin: 29.2 %
- Free cash flow: $5.30 B; Operating cash flow: $27.75 B
- Balance sheet: Total assets $502.05 B, total equity $362.92 B, total debt $41.67 B (net debt $20.63 B)
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Q1 2025
- Revenue: $90.23 B (down ≈ 1 % YoY)
- Net income: $34.54 B; EPS ≈ $2.84
- Operating margin: 33.9 %; Net margin: 38.3 % (peak of the period)
- Free cash flow: $18.95 B; Operating cash flow: $36.15 B
- Balance sheet: Total assets $475.37 B, equity $345.27 B, debt $23.56 B (net debt $0.30 B)
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Q4 2024
- Revenue: $96.47 B (flat YoY)
- Net income: $26.54 B; EPS ≈ $2.17
- Operating margin: 32.1 %; Net margin: 27.5 %
- Free cash flow: $24.84 B; Operating cash flow: $39.11 B
- Balance sheet: Total assets $450.26 B, equity $325.08 B, debt $25.46 B (net debt $2.00 B)
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Q3 2024
- Revenue: $88.27 B (down ≈ 2 % YoY)
- Net income: $26.30 B; EPS ≈ $2.14
- Operating margin: 32.3 %; Net margin: 29.8 %
- Free cash flow: $17.64 B; Operating cash flow: $30.70 B
- Balance sheet: Total assets $430.27 B, equity $314.12 B, debt $26.92 B (net debt $6.96 B)
Key Trends
- Revenue is relatively stable around the $90-$96 B range, with modest growth in Q2 2025 after a dip in Q1 2025.
- Net income peaked in Q1 2025 (38 % net margin) then fell back to the high-20 % range, indicating earnings volatility tied to cost structure and tax impacts.
- Free cash flow surged in Q1 2025 due to lower capex, but returned to a more sustainable $5-$25 B range thereafter.
- Balance sheet strength remains high: cash & short-term investments exceed $95 B, equity above $300 B, and debt modest (debt-to-equity ≈ 0.11). Net debt is low, providing ample liquidity.
Fundamental Ratios (TTM)
| Ratio | Value |
|---|---|
| P/E (TTM) | 22.26 |
| PEG (TTM) | 4.80 |
| Current Ratio | 1.90 |
| Debt-to-Equity | 0.115 |
| ROE | 34.3 % |
| ROA | 23.0 % |
| Interest Coverage | 301.9 |
| Gross Margin | 58.9 % |
| Operating Margin | 32.7 % |
| Net Margin | 31.1 % |
Valuation Implications
- The P/E of ~22 is modestly above the broader market average, reflecting growth expectations but also a premium for strong cash generation.
- A high PEG (4.8) suggests that earnings growth may not fully justify the price, warranting caution.
- Robust liquidity (current ratio ≈ 1.9) and low leverage support a stable dividend (≈ 0.38 % yield) and share-repurchase capacity.
- Strong ROE and ROA indicate efficient capital use, reinforcing the company’s premium valuation.
Conclusion
Alphabet’s financials show solid revenue stability, high profitability, and a very strong balance sheet. While earnings have fluctuated, cash flow remains healthy and leverage is low. The current valuation reflects a growth premium that may be justified by the company’s dominant market position and continued investment in high-margin businesses, but the elevated PEG ratio signals that investors should monitor earnings growth closely.