Investors seeking growth at a reasonable cost should explore ALPHABET INC-CL C (NASDAQ:GOOG).

Here's ALPHABET INC-CL C (NASDAQ:GOOG) for you, a growth stock our stock screener believes is undervalued. GOOG is scoring impressively in terms of growth while demonstrating strong financials. On top of that, it remains attractively priced. Let's break it down further.

ChartMill's Evaluation of Growth

ChartMill assigns a Growth Rating to each stock, ranging from 0 to 10. This rating is determined by analyzing different growth elements, including EPS and revenue growth, spanning both historical and future figures. In the case of GOOG, the assigned 7 reflects its growth potential:

• The Earnings Per Share has grown by an impressive 38.79% over the past year.
• Measured over the past years, GOOG shows a very strong growth in Earnings Per Share. The EPS has been growing by 25.25% on average per year.
• GOOG shows quite a strong growth in Revenue. In the last year, the Revenue has grown by 13.87%.
• GOOG shows quite a strong growth in Revenue. Measured over the last years, the Revenue has been growing by 16.68% yearly.
• The Earnings Per Share is expected to grow by 15.11% on average over the next years. This is quite good.
• Based on estimates for the next years, GOOG will show a quite strong growth in Revenue. The Revenue will grow by 10.80% on average per year.

Understanding GOOG's Valuation

To assess a stock's valuation, ChartMill utilizes a Valuation Rating on a scale of 0 to 10. This comprehensive assessment considers various valuation aspects, comparing price to earnings and cash flows, while factoring in profitability and growth. GOOG has achieved a 5 out of 10:

• Based on the Price/Earnings ratio, GOOG is valued a bit cheaper than the industry average as 67.14% of the companies are valued more expensively.
• GOOG is valuated rather cheaply when we compare the Price/Earnings ratio to 27.63, which is the current average of the S&P500 Index.
• When comparing the Price/Forward Earnings ratio of GOOG to the average of the S&P500 Index (20.85), we can say GOOG is valued slightly cheaper.
• Compared to the rest of the industry, the Enterprise Value to EBITDA ratio of GOOG indicates a somewhat cheap valuation: GOOG is cheaper than 72.86% of the companies listed in the same industry.
• GOOG's Price/Free Cash Flow ratio is a bit cheaper when compared to the industry. GOOG is cheaper than 61.43% of the companies in the same industry.
• The excellent profitability rating of GOOG may justify a higher PE ratio.
• GOOG's earnings are expected to grow with 13.23% in the coming years. This may justify a more expensive valuation.

Assessing Health Metrics for GOOG

ChartMill assigns a Health Rating to every stock. This score ranges from 0 to 10 and evaluates the different health aspects like liquidity and solvency, both absolutely, but also relative to the industry peers. GOOG scores a 8 out of 10:

• GOOG has an Altman-Z score of 11.35. This indicates that GOOG is financially healthy and has little risk of bankruptcy at the moment.
• With an excellent Altman-Z score value of 11.35, GOOG belongs to the best of the industry, outperforming 95.71% of the companies in the same industry.
• GOOG has a debt to FCF ratio of 0.17. This is a very positive value and a sign of high solvency as it would only need 0.17 years to pay back of all of its debts.
• The Debt to FCF ratio of GOOG (0.17) is better than 78.57% of its industry peers.
• A Debt/Equity ratio of 0.03 indicates that GOOG is not too dependend on debt financing.
• The current and quick ratio evaluation for GOOG is rather negative, while it does have excellent solvency and profitability. These ratios do not necessarly indicate liquidity issues and need to be evaluated against the specifics of the business.

Analyzing Profitability Metrics

ChartMill's Profitability Rating offers a unique perspective on stock analysis, providing scores from 0 to 10. These ratings consider a wide range of profitability metrics and margins, both in comparison to industry peers and on their own merits. For GOOG, the assigned 9 is a significant indicator of profitability:

• GOOG's Return On Assets of 22.24% is amongst the best of the industry. GOOG outperforms 94.29% of its industry peers.
• GOOG's Return On Equity of 30.80% is amongst the best of the industry. GOOG outperforms 94.29% of its industry peers.
• GOOG has a better Return On Invested Capital (27.32%) than 97.14% of its industry peers.
• The Average Return On Invested Capital over the past 3 years for GOOG is significantly above the industry average of 11.51%.
• The last Return On Invested Capital (27.32%) for GOOG is above the 3 year average (24.15%), which is a sign of increasing profitability.
• With an excellent Profit Margin value of 28.60%, GOOG belongs to the best of the industry, outperforming 92.86% of the companies in the same industry.
• GOOG's Profit Margin has improved in the last couple of years.
• With an excellent Operating Margin value of 32.79%, GOOG belongs to the best of the industry, outperforming 97.14% of the companies in the same industry.
• In the last couple of years the Operating Margin of GOOG has grown nicely.

Every day, new Affordable Growth stocks can be found on ChartMill in our Affordable Growth screener.

Our latest full fundamental report of GOOG contains the most current fundamental analsysis.

Disclaimer

Important Note: The content of this article is not intended as trading advice. It is essential to perform your own analysis and exercise caution when making trading decisions. The article presents observations created by automated analysis but does not guarantee any trading or investment outcomes. Always trade responsibly and make independent judgments.