Google’s Plunge: Buyer’s Opportunity?
Blame R.R. Donnelley (RRD) if you want, for releasing Google (GOOG) financials early, and in incomplete form, but the numbers don’t lie: a tough quarter, and an ongoing, difficult transition to mobile technology.
But does a 9% drop on the stock constitute a buyer’s opportunity?
True, Google has been trading at a premium, based on PE ratio, to rivals Microsoft (MSFT) and Apple (AAPL):
GOOG PE Ratio TTM data by YCharts
But not entirely without justification. Google’s revenue growth rate is far better than Microsoft’s. And the market is skeptical of Apple’s ability to maintain its growth rate, given that its business is selling fashionable gadgets.
GOOG Revenue Quarterly YoY Growth data by YCharts
If you view Google as a long-term utility -- it’s how most people search the Internet – there’s reason to be optimistic about its prospects. And its success in the mobile phone business, through Droid technology, demonstrates (even if Google swiped a few ideas from Apple; hey didn’t Apple lift a few ideas in its time?) demonstrates an ability to advance its business, perhaps more successfully than Microsoft.
By the way, last March, YCharts wrote about old economy vs. new economy in investments, and the two companies chosen to represent their eras: Google and R.R. Donnelley. YCharts has also written admiring of Google stock when it came under selling pressure before.
Jeff Bailey is the editor of YCharts, which includes the just-released YCharts Pro Platinum for professional investors.
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