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Drones, Google Glass and Innovation Justify Google's Valuation: StockTwits

NEW YORK (TheStreet) -- How do you grow $13 billion by more than 20% a year? That's a question facing investors ahead of Google's (GOOG) (GOOGL - Get Report) earnings Wednesday, after the bell. And it's one that a majority of investors on believe the world's dominant search engine can answer.

Sentiment on the stock is 65% bullish. Many cashtaggers believe that Google's growth warrants its price, with a 2015 estimated earnings ratio of 17, based on Google's $545.20 share price at Monday's close.

5/Companies can grow into the valuation over time like @Google $GOOG

-- Y CHARTS (@ycharts) Apr. 14 at 04:55 PM

Most of Google's growth will come from advertising. Last quarter, Google grew its Google sites revenue, which primarily consists of search advertising, by 22% from the prior year to $10.6 billion. It made a total of $12.92 billion in net income last year.

But Google is so big now that it can't rely on advertising alone to justify its multiples. The digital advertising market is expected to be $121 billion this year, and grew about 16% from the prior year, according to a report released this month by ZenithOptimedia, a unit of ad giant Publicis. And there is more competition for those dollars, with social media giants like Facebook (FB - Get Report) and Twitter (TWTR) vying for a bigger slice of the pie.

Google is working to grow its non-advertising revenue beyond last quarter's $1.65 billionn -- or 10% of sales. Today, it began selling Google Glass, its Internet- and video-enabled glasses, albeit only for one day. The price is $1,500.

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