"We are below Street in 2015 and are slightly lowering 2016 EPS, the key valuation metric, to $33.81, which is below Street at $35.77," analysts said.
"Increased regulatory risk, particularly in the EU, strong Apple product cycle and search contract renewal uncertainty, competition (FB in ad networks, possibly search) and reversal of U.S. online advertising market share gains due to social emergence" additionally led analysts to estimate Google's U.S. market share will fall from 41% in 2013 to 40% in 2014E and 39% in 2015E.
Shares of Google are down 0.92% to $537.57 in pre-market trading.
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 few notable 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 expanding profit margins. We feel these strengths outweigh the fact that the company has had sub par growth in net income."
Highlights from the analysis by TheStreet Ratings Team goes as follows:
- Despite its growing revenue, the company underperformed as compared with the industry average of 28.2%. Since the same quarter one year prior, revenues rose by 20.1%. This growth in revenue does not appear to have trickled down to the company's bottom line, displayed by a decline in earnings per share.
- GOOGL's debt-to-equity ratio is very low at 0.05 and is currently below that of the industry average, implying that there has been very successful management of debt levels. Along with this, the company maintains a quick ratio of 4.03, which clearly demonstrates the ability to cover short-term cash needs.
- Net operating cash flow has increased to $5,994.00 million or 17.92% when compared to the same quarter last year. Despite an increase in cash flow, GOOGLE INC's average is still marginally south of the industry average growth rate of 25.93%.
- GOOGLE INC has experienced a steep decline in earnings per share in the most recent quarter in comparison to its performance from the same quarter a year ago. This company has reported somewhat volatile earnings recently. But, we feel it is poised for EPS growth in the coming year. During the past fiscal year, GOOGLE INC increased its bottom line by earning $37.91 versus $32.47 in the prior year. This year, the market expects an improvement in earnings ($51.59 versus $37.91).
- You can view the full analysis from the report here: GOOGL Ratings Report