Powerful Earnings Raise Google's Mark

This column was originally published on RealMoney on May 1 at 3:36 p.m. EDT. It's being republished as a bonus for TheStreet.com readers.

If you own Google(GOOG Quote), congratulations. The Internet search and advertising company had a terrific 2005, and all signs point for continued growth.

In fact, the company's earnings exceed on every estimation. However, if you don't own the stock, now is not the time to chase it, because, remarkably, its valuation has run past its enormous earnings strength.

To make sure a company has high-quality profits, the first thing I do is run the financial statement through my earnings power model to create two alternate income statements, a defensive income statement (free cash flow) and an enterprising income statement (economic value added). ...