Yahoo! Inc. (YHOO), Microsoft Corporation (MSFT) & A Big Anniversary for Google Inc (GOOG)

Should investors take notice?

With the passing of AdSense’s 10-year anniversary, a more connected future has Google’s top-line prospects looking quite bright, and on the bottom line, analysts agree. Wall Street expects Google Inc (NASDAQ:GOOG)’s earnings to grow by 14.9% a year over the next half-decade, and shares aren’t too expensive at a PEG of 1.8.

Microsoft Corporation (NASDAQ:MSFT), which is experimenting with a new advertising concept of its own, in which fluid, motion-filled contextual designs are used to boost interaction, sports less expected growth. Sell-side analysts expect Mr. Softy to grow its EPS by an annual rate of 8.7% through 2017, and its shares are actually more expensive than Google’s, at a PEG above 2.0.

This basic fact gives Google Inc (NASDAQ:GOOG) the decided advantage from a valuation standpoint, which is something that it cannot say when compared to Yahoo! Inc. (NASDAQ:YHOO). Yahoo’s recent acquisition of Tumblr has literally filled the company’s newsfeed for the past two weeks, and the company’s continued push for in-organic growth has some analysts feeling quite bullish.

The Street predicts Yahoo! Inc. (NASDAQ:YHOO) to generate better EPS growth than Microsoft Corporation (NASDAQ:MSFT) at 13.5% a year over the next five, and it’s clear that the markets haven’t caught up to this potential; shares trade at a PEG near 0.5. Clearly, this forecast rests on Yahoo! Inc. (NASDAQ:YHOO)’s ability to build an advertising platform on Tumblr’s massive network of homemade blogs in a manner that’s “tasteful and seamless,” according to Marissa Mayer.

Final thoughts

If Yahoo! Inc. (NASDAQ:YHOO)’s recent home page re-design is any indication, Mayer’s ability to influence design in a “tasteful” manner is proficient, so Yahoo/Tumblr bulls have cause to be excited. Still, when compared to Microsoft Corporation (NASDAQ:MSFT) and Google, it’s the latter that still looks like the dominant force in online advertising, and its 10-year AdSense anniversary should give way to another 10 years of prosperity with Enhanced Campaigns. We’d prefer growth to value here, and Google Inc (NASDAQ:GOOG)—which continues to edge closer to the $1,000 mark—offers the best combination of both factors in comparison to its closest peers. Continue reading here to learn more about Insider Monkey’s top market-beating strategy.

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