Don't overlook ALPHABET INC-CL A (NASDAQ:GOOGL)—a stock with solid growth prospects and a reasonable valuation.

ALPHABET INC-CL A (NASDAQ:GOOGL) was identified as an affordable growth stock by our stock screener. GOOGL is showing great growth, but also scores well on profitability, solvency and liquidity. At the same time it seems to be priced reasonably. We'll explore this a bit deeper below.

How do we evaluate the Growth for GOOGL?

ChartMill assigns a Growth Rating to every stock. This score ranges from 0 to 10 and evaluates the different growth aspects like EPS and Revenue, both in the past as in the future. GOOGL scores a 7 out of 10:

• GOOGL shows a strong growth in Earnings Per Share. In the last year, the EPS has been growing by 38.79%, which is quite impressive.
• GOOGL shows a strong growth in Earnings Per Share. Measured over the last years, the EPS has been growing by 25.25% yearly.
• Looking at the last year, GOOGL shows a quite strong growth in Revenue. The Revenue has grown by 13.87% in the last year.
• GOOGL 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, GOOGL will show a quite strong growth in Revenue. The Revenue will grow by 10.80% on average per year.

Exploring GOOGL's Valuation

ChartMill assigns a Valuation Rating to each stock, ranging from 0 to 10. This rating is calculated by analyzing different valuation elements, such as price to earnings and free cash flow, both in absolute terms and relative to the market and industry. In the case of GOOGL, the assigned 6 reflects its valuation:

• GOOGL's Price/Earnings ratio is a bit cheaper when compared to the industry. GOOGL is cheaper than 68.57% of the companies in the same industry.
• GOOGL's Price/Earnings ratio indicates a valuation a bit cheaper than the S&P500 average which is at 28.31.
• 61.43% of the companies in the same industry are more expensive than GOOGL, based on the Price/Forward Earnings ratio.
• Compared to an average S&P500 Price/Forward Earnings ratio of 21.14, GOOGL is valued a bit cheaper.
• Based on the Enterprise Value to EBITDA ratio, GOOGL is valued a bit cheaper than 74.29% of the companies in the same industry.
• 64.29% of the companies in the same industry are more expensive than GOOGL, based on the Price/Free Cash Flow ratio.
• GOOGL has an outstanding profitability rating, which may justify a higher PE ratio.
• GOOGL's earnings are expected to grow with 14.02% in the coming years. This may justify a more expensive valuation.

Analyzing Health Metrics

A critical element of ChartMill's stock evaluation is the Health Rating, which spans from 0 to 10. This rating considers multiple health factors, including liquidity and solvency, both in absolute terms and relative to industry peers. GOOGL has received a 9 out of 10:

• GOOGL has an Altman-Z score of 11.43. This indicates that GOOGL is financially healthy and has little risk of bankruptcy at the moment.
• With an excellent Altman-Z score value of 11.43, GOOGL belongs to the best of the industry, outperforming 94.29% of the companies in the same industry.
• The Debt to FCF ratio of GOOGL is 0.17, which is an excellent value as it means it would take GOOGL, only 0.17 years of fcf income to pay off all of its debts.
• GOOGL has a better Debt to FCF ratio (0.17) than 81.43% of its industry peers.
• A Debt/Equity ratio of 0.03 indicates that GOOGL is not too dependend on debt financing.
• The current and quick ratio evaluation for GOOGL 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.

Profitability Insights: GOOGL

ChartMill utilizes a Profitability Rating to assess stocks, scoring them on a scale of 0 to 10. This rating takes into account a variety of profitability ratios and margins, both in absolute terms and in comparison to industry peers. GOOGL has earned a 9 out of 10:

• Looking at the Return On Assets, with a value of 22.24%, GOOGL belongs to the top of the industry, outperforming 95.71% of the companies in the same industry.
• GOOGL's Return On Equity of 30.80% is amongst the best of the industry. GOOGL outperforms 95.71% of its industry peers.
• The Return On Invested Capital of GOOGL (27.32%) is better than 98.57% of its industry peers.
• The Average Return On Invested Capital over the past 3 years for GOOGL is significantly above the industry average of 11.51%.
• The 3 year average ROIC (24.15%) for GOOGL is below the current ROIC(27.32%), indicating increased profibility in the last year.
• GOOGL has a better Profit Margin (28.60%) than 94.29% of its industry peers.
• In the last couple of years the Profit Margin of GOOGL has grown nicely.
• With an excellent Operating Margin value of 32.79%, GOOGL belongs to the best of the industry, outperforming 98.57% of the companies in the same industry.
• In the last couple of years the Operating Margin of GOOGL has grown nicely.

Our Affordable Growth screener lists more Affordable Growth stocks and is updated daily.

Check the latest full fundamental report of GOOGL for a complete fundamental analysis.

Disclaimer

This is not investing advice! The article highlights some of the observations at the time of writing, but you should always make your own analysis and invest based on your own insights.