GOOGLE EARNINGS PREVIEW: Yes, They'll Beat Estimates, But That's Already Priced Into Stock

Google's casualty in China

Google (GOOG) reports Q1 2010 earnings after the close on Thursday.  We’ll be analysing the earnings live here starting at 4 PM EST.

The Bottom Line: Anecdotal reports have suggested that the recovery in search advertising has continued in 2010, so analysts are expecting modest upside to consensus estimates.

Google’s stock has drifted up for the past six weeks, but has lagged the market, in part due to the company’s decision to pull out of China.

Google will likely need to significantly beat estimates for the stock to rise on the announcement.

Background: At $589, GOOG shares are trading at about 22-times 2010 estimated EPS.  This is below historical highs of around 30-times, but still pretty pricey versus the overall tech group.  As a result, the company will need to consistently beat expectations this year (and soon demonstrate it has plans for a new growth engine beyond search) to see material multiple expansion.

Key Consensus Estimates:

  • Q1 Net Revenue: $4.93 Billion
  • Non-GAAP Operating Income: $2.7 Billion
  • Non-GAAP EPS: $6.56
  • Besides the search outlook, we’re keeping our eyes out for commentary on mobile, YouTube, and cloud initiatives like Google Docs.

Here is an excellent snapshot from Citi analyst Mark Mahaney (click to enlarge):

mahaney cheat sheet

Business Insider Emails & Alerts

Site highlights each day to your inbox.

Follow Business Insider Australia on Facebook, Twitter, LinkedIn, and Instagram.

Tagged In

google sai-us