A little birdy has tipped me to some updates on Google Finance. There are now comparison charts, new chart settings and features, more market data, and the ability to import portfolios from other sites. I like where this is going, and Yahoo Finance also has added new features as well…
Finance News
A little birdy has tipped me to some updates on Google Finance. There are now comparison charts, new chart settings and features, more market data, and the ability to import portfolios from other sites. I like where this is going, and Yahoo Finance also has added new features as…
Hey, just in time for the latest rosy Google earnings reports.
“look, boss, we made another billion!”
It’s funny that Google released their stock compare function at a time when the contrast in performance between YHOO and GOOG is so stark. Just a coincidence, but still crazy timing, right after GOOG shows 92% YOY 3Q growth, and Yahoo announces -27% of the same.
Run the comparison on Google finance, max out x axis, and you’ll see GOOG gaining about 300% while YHOO dips into negative territory over the same period.
The compare function was one of the only reasons I was still using Yahoo Finance, this might be the nail in the coffin. Yahoo will remain my homepage though, for now.
Lets keep all media hype away and quick short covering amusement following it and check out Google’s development in recent Q in order to try to understand its valuation compare to its piers. Upside now is known and everybody is on Buy side with price target 600 (+30%). Shorts are killed and short ratio is less than one day trade, no easy money for upside after yestoday short covering left, somebody has to start to buy into this story at this 460 level. First Google came with Rev 2.69 billion which is less then 2.76 which I have projected from PWC predictions of 16-18 billion online ads market in 2006 with Google Share of 40.5% of this market in Q3 (seasonal trend applied) So, first Google did not manage to increase its market share in Q3. Second, lets look at earnings GAAP ($) Q1 1.95, Q2 2.33 (+19%), Q3 2.36 (+1.3%!?) Earnings growth dramatically slowed. Third, revenues: Q1 2.25, Q2 2.46 (+9.3%), Q3 2.69 (+9.3%!?) math’s precision or can I smell some cooking oil here? 44% of revenue is coming from international business. All hitfarms are located in pure “international “destinations India, China, Malaysia, Russia etc. Revenue growth is slowing with increased risk of cutting back on advertisement due to economy slowdown and click fraud awareness buy the customers. Fourth, Net cash from operations Q1 0.825 (37% of Rev), Q2 0.841 (+2% 34% of Rev), Q3 1.0 (+19% 37% of Rev) Capex Q2 0.699 (0.319 Real eastate 0.380 “normalised”), Q3 0.492 (+29%!) So Google Capex increase is really much bigger then their Rev growth 29% vs 9.3% with constant Net cash from operations at 37% Rev, Free Cash Flow is under compression. Total Free Cash Flow for nine months is 1.112. If we will project Rev growth for Google at 12% for Q4 vs 9.3% for Q3 they will make Rev Q4 3.0 (less then based on PWC and 41% of market 3.2) Net cash from operations at 37% of Rev 3.0 will be 1.1, if we apply 20% growth for NCFO in Q4 (vs +19% Q3) we will get 1.2 so lets assume NCFO will be in the middle = 1.15. What about Capex? I think it will be increasing dramatically with moving into video: broadband, storage, new blades, electricity. But if we even aply same growth to capex as to Rev +12% (they said it will be bigger then Rev growth, Q3 was +29%) Capex Q4 will be 0.551. So, Free Cash Flow in Q4 will be NCFO-CAPEX=0.6 and total FCF 2006 will be 1.712 If stock will not move from 460 we have MC=142 billion MC/FCF=83! YHOO is projecting FCF 1.35 in 2006 (lowered recently) with MC at 32 their ratio is MC/FCF=24 If the Google will manage to make even 2.8 EPS in Q4 (+19%) (do not forget annual charge for all those “to be expenced option related expences which they did not account in past Qs) GAAP 2006 will be 9.44. So with GOOG at 460 we have company with 2006 est MC/FCF=83, P/E=48.7, P/S=14.2 with slowing growth in EPS and Revenue and most important with dramatic compression in FCF. YouTube will bring dilution, much more CAPEX in Video Game and No revenue so far. What is the more reasonable valuation of Google: if we give GOOG MC/FCF=40 (69% over YHOO for leadership and “strength”) MC with 1.712 FCF must be 68.5 billion with 310 million shares outstanding before YouTube diluton it is…221 share price. When MR Market will figure it out I do not know, but I am testing the water with March 2007 460 puts.
Regards
Good luck to you sufly! Although I agree with you that the pricing on GOOG appears irrationally exhuberant, if I’d put into GOOG calls what I’ve lost with GOOG puts I’d have done very, very well. Google makes earnings magic, and that gets valued very highly by Wall Street. A hat tip to Google!
Joseph,
You are right at the moment, but even this year money on puts were made, do not forget even now stock is still below 475 and with right strategy a lot of money could be made on Bubble 2.0 bursting…
regards,
http://sufiy.blogspot.com/
>>but still crazy timing
You really think its a crazy timing ?!?
they know exactly whot to do to get a maximum of their actions.
Sufiy –
Ha – don’t get me gambling again dude! I’m now long on Yahoo which does not have the timing component of betting with options.