We believe there are other stocks that are more valuable right now. Alphabet (Google) stake (NASDAQ: GOOG). GOOG’s current price/operating income ratio (P/EBIT) of 30.3x is much higher than 14.3x for Turkey. Altra Industrial Movement (NASDAQ: AIMC), for 7.38x 1-800-FLOWERS.COM (NASDAQ: FLWS), for 5.37x Quidel (NASDAQ: QDEL) and for 5.36x Nextstar Publishing Group (NASDAQ: NXST). While these stocks had a lower valuation (P/EBIT) compared to Google, they all saw better revenue and operating income growth. This disconnect between valuation and performance could mean it’s better to buy GOOG stock against AIMC, FLWS, QDEL and NXST. More specifically, we conclude by looking at historical trends in revenues, operating income and EBIT for these companies. Our control panel – Better Bet than GOOG Stock: Pay Less to Get More From Stocks AIMC, FLWS, QDEL, NXST– has more details – some of which are summarized below.
1. Income Increase
Google’s revenue The Group has grown by an average of 18% over the last three years, compared to average revenue growth of 28% for Altra Industrial Motion, 23% for 1-800-FLOWERS.COM, 100% for Quidel, and 24% for Nexstar Broadcasting. If we look at revenue growth over the last twelve months, Google’s 33% revenue growth is comparable to Altra Industrial Motion’s 7.7% and Nexstar Broadcasting Group’s 29% growth, but compared to an average of 42 percent growth. is much lower. 1-800% for FLOWERS.CO and 180% for Quidel.
2. Operating Income Growth
Google’s average three-year operating revenue growth of 17%, lower than 38% for Altra Industrial Motion, 58% for 1-800-FLOWERS.COM, 409% for Quidel and Nexstar Broadcasting Group’s % 96 of them. If we look at operating margin for the last twelve months, Google’s 28% operating margin is better than Altra Industrial Motion’s 14% and 1-800-FLOWERS.COM’s 7.7%. Meanwhile, Quidel and Nexstar Broadcasting Group have posted operating margins of 63% and 25%, respectively, over the past twelve months.
Network of All
As we’ve seen over the last three years, Altra Industrial Motion, 1-800-FLOWERS.COM, Quidel and Nexstar Broadcasting Group have higher revenue growth and operating revenue growth compared to Google. Despite better profit and revenue growth over the last three years, these companies have a relatively lower P/EBV. Even if we look at operating income growth over the last twelve months one year ago, Altra Industrial Motion, 1-800-FLOWERS.COM, Quidel and Nexstar Broadcasting Group were getting better wages compared to Google and even then Google was trading with a higher multiplier.
Google’s continued poor performance in revenue and operating income growth relative to the other four companies reinforces our conclusion that the stock is comparatively expensive, and we think this gap in valuation will close over time to support a more attractively priced set of names. That’s why we believe Altra Industrial Motion, 1-800-FLOWERS.COM, Quidel and Nexstar Broadcasting Group currently have better buying opportunities compared to Google.
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