Google (GOOG) Shares Could Top $1,500 in FY12
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Google (Nasdaq: GOOG) has rocketed since last Friday, upon the massive, Apple (Nasdaq: AAPL)-like earnings beat it delivered to Wall Street. Shares moved 5.9 percent to close at $591.68 last Friday.
But just how much more is left in Google? Has the best passed? Quick analysis based on historical trends suggests otherwise.
According to data gathered overt the last 21 quarters -- the most recent quarter included -- Google has had an average P/E of 29.27 times.
From the first-quarter of 2008 through recent reports, Google has beat estimates by an average of 5.74 percent. Further, data suggests a CAGR of about 5.11 percent for Google over the same period. With Bloomberg having consensus estimates of $43.44 for Google earnings in fiscal 2012, we can assume an additional 5.74 might show up for earnings of $45.93, comfortably above the $35.45 expected in 2011.
Using the historical multiple of 29.27 times -- and smoothing to 29.3 times -- Google should hit $1,344.5 per share by the end of 2012, up about 130 percent from today's range.
Excluding rapid growth in 2007 which may have skewed numbers slightly, and Google is at a 22.3 multiple, for share price of $1,024.24. Assuming growth slows over the next year, a more conservative estimate of 20 times might be in order, and the stock should still be at $918.60 per share, or a 55 percent gain. Should growth accelerate with the release Motorola Mobility (NYSE: MMI) handsets, companies spending more on ads, and gaining more display ad market position, Google might see a multiple 33, or share price of $1,515.69, up about 160 percent.
Arguments against upside include Google trading 270 percent over it's book value of $161.13, and losing market share in the mobile realm as OEMs switch to other operating systems as the Android market becomes more flooded.
So, growth is in the works for Google, and the stock might be trading undervalued to the max right now. Shares are slightly lower Monday morning.
But just how much more is left in Google? Has the best passed? Quick analysis based on historical trends suggests otherwise.
According to data gathered overt the last 21 quarters -- the most recent quarter included -- Google has had an average P/E of 29.27 times.
From the first-quarter of 2008 through recent reports, Google has beat estimates by an average of 5.74 percent. Further, data suggests a CAGR of about 5.11 percent for Google over the same period. With Bloomberg having consensus estimates of $43.44 for Google earnings in fiscal 2012, we can assume an additional 5.74 might show up for earnings of $45.93, comfortably above the $35.45 expected in 2011.
Using the historical multiple of 29.27 times -- and smoothing to 29.3 times -- Google should hit $1,344.5 per share by the end of 2012, up about 130 percent from today's range.
Excluding rapid growth in 2007 which may have skewed numbers slightly, and Google is at a 22.3 multiple, for share price of $1,024.24. Assuming growth slows over the next year, a more conservative estimate of 20 times might be in order, and the stock should still be at $918.60 per share, or a 55 percent gain. Should growth accelerate with the release Motorola Mobility (NYSE: MMI) handsets, companies spending more on ads, and gaining more display ad market position, Google might see a multiple 33, or share price of $1,515.69, up about 160 percent.
Arguments against upside include Google trading 270 percent over it's book value of $161.13, and losing market share in the mobile realm as OEMs switch to other operating systems as the Android market becomes more flooded.
So, growth is in the works for Google, and the stock might be trading undervalued to the max right now. Shares are slightly lower Monday morning.
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