Google Inc. (NASDAQ:GOOG) keeps itself at a high stock level, battling with Apple Inc. (NASDAQ:AAPL) for the title of Highest Prices Stock on the markets. But as was explored in this space Wednesday with Apple stock and whether it may be undervalued for the company’s fundamentals, we can look at a recent analysis that suggests the same thing for Google stock – that it might be a value stock that has significant upside to it in the coming months.
This very detailed analysis puts Google’s current stock price up against several metrics, including earnings over the past several years. While the first graph shows how volatile Google Inc. (NASDAQ:GOOG) stock has been over the last two years (though note the sharp upswing in the last few weeks), the remaining graphs show the underlying numbers in the company’s financials, which essentially suggest that the company, despite the current upswing, is still in effect underperforming what the company numbers would suggest.
Broken down by several metrics, Google Inc. (NASDAQ:GOOG) appears to be currently on a run where it is not keeping up with its average over the trailing five years. The very first such metric is the price-to-earnings ratio, which shows that Google is currently trading a 20 times its earnings per-share, when the company has been averaging 27 times EPS over the last five years. In the price-to-sales metric, Google is currently trading at a little more than 5 times its sales, which is well below the five-year average of about 6.75 times.
IN yet a third metric Google Inc. (NASDAQ:GOOG) has been undervalued lately compared to its five-year trailing average. In the ratio of price of operational cash flow, the company has had a five-year average of about 18.4 times the company’s cash on hand. Currently the stock is trading at 14 times the company’s cash flow. And in yet another metric, price to book value of the company, Google is currently trading at about 3.5 times its book value; over the last five years that ratio has been about 4.7.
The bottom line is that if you are looking into a good large-cap value stock, Google Inc. (NASDAQ:GOOG), despite its gaudy stock price, by many metrics is a bargain compared to its history. That would seem to be the attitude of a lot of hedge-fund managers like Chase Coleman of Tiger Global Management.