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Google (GOOG) Falls After Hours on Disappointing Earnings Report

NEW YORK (TheStreet) -- Google  (GOOG)

The company reported an approximately 3% year-over-year increase in net income to $3.45 billion, or $5.04 a share, from $3.35 billion, or $4.97 a share. Adjusted profit was $6.27 a share. Revenue increased 19% year over year to $15.4 billion. Adjusted revenue, which excludes traffic acquisition costs, was $12.19 billion.

Analysts polled by Thomson Reuters expected profit of $6.41 a share on revenue of $15.5 billion.

Consumers' "paid clicks," which include clicks on ads shown on Google's sites and sites that use Google technology, on Google's ads increased 26%. The average "cost per click, " which gauges how much advertisers pay when customers click on search ads alongside Google's search results, dropped 9%.

Google also noted a $198 million net loss from "discontinued operations," which include the Motorola smartphone business. The company said in January it would sell the business to China's Lenovo Group for $2.91 billion.

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Separately, TheStreet Ratings team rates GOOGLE INC as a Buy with a ratings score of B+. TheStreet Ratings Team has this to say about their recommendation:

"We rate GOOGLE INC (GOOGL) a BUY. This is driven by a number of strengths, which we believe should have a greater impact than any weaknesses, and should give investors a better performance opportunity than most stocks we cover. The company's strengths can be seen in multiple areas, such as its robust revenue growth, largely solid financial position with reasonable debt levels by most measures, reasonable valuation levels, good cash flow from operations and compelling growth in net income. We feel these strengths outweigh the fact that the company has had lackluster performance in the stock itself."

Highlights from the analysis by TheStreet Ratings Team goes as follows:

  • GOOGL's revenue growth has slightly outpaced the industry average of 16.1%. Since the same quarter one year prior, revenues rose by 16.9%. Growth in the company's revenue appears to have helped boost the earnings per share.
  • Although GOOGL's debt-to-equity ratio of 0.06 is very low, it is currently higher than that of the industry average. Along with this, the company maintains a quick ratio of 4.28, which clearly demonstrates the ability to cover short-term cash needs.
  • Net operating cash flow has increased to $5,238.00 million or 12.18% when compared to the same quarter last year. In addition, GOOGLE INC has also modestly surpassed the industry average cash flow growth rate of 11.64%.
  • The net income growth from the same quarter one year ago has exceeded that of the Internet Software & Services industry average, but is less than that of the S&P 500. The net income increased by 17.0% when compared to the same quarter one year prior, going from $2,886.00 million to $3,376.00 million.
  • You can view the full analysis from the report here: GOOGL Ratings Report


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Editor's Note: Any reference to TheStreet Ratings and its underlying recommendation does not reflect the opinion of TheStreet, Inc. or any of its contributors including Jim Cramer or Stephanie Link.

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