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What's in the Offing for Alphabet's (GOOGL) Q3 Earnings?

Alphabet Inc. GOOGL is scheduled to report third-quarter 2019 results on Oct 28. In the last reported quarter, it delivered a positive earnings surprise of 23.67%.

Notably, the stock outperformed the Zacks Consensus Estimate in all the trailing four quarters, with the average being 18.85%.

Performance in the Last Reported Quarter

Alphabet reported second-quarter 2019 non-GAAP earnings of $14.21 per share, which surpassed the Zacks Consensus Estimate by $2.72 and increased 20.9% from the year-ago period.

In addition, revenues of $31.7 billion outpaced the Zacks Consensus Estimate of $30.90 billion and improved 20.8% on a year-over-year basis.

Let’s see how things have shaped up for this announcement.

Alphabet Inc. Price and EPS Surprise

 

Alphabet Inc. Price and EPS Surprise

Alphabet Inc. price-eps-surprise | Alphabet Inc. Quote

Search, New Devices & Cloud Momentum - Key Catalysts

Alphabet’s dominant position in the search world is anticipated to have been a key catalyst for top-line growth.

The company’s continued focus on innovation of the search segment, which accounts for a major portion of total revenues, is expected to have enhanced the segment’s earnings and driven traffic on its platform.

Google has been significantly gaining momentum in the highly-competitive cloud market over the last few quarters. This trend is expected to have aided its performance. During the third quarter, it expanded the cloud service portfolio and data centers. The upcoming results are likely to reflect the positive impact of the same.

The company’s initiatives to expand presence in the electronic gadgets space on the back of advanced technologies are expected to have been a key catalyst. During the quarter, it unveiled new devices that will help the company to rapidly penetrate into smartphone, smart speaker, laptop, earbuds and router markets. The new devices are expected to have driven its top-line growth in the to-be-reported quarter.

Concerns

Alphabet’s search advertising business has been facing stiff competition from Amazon. Google Cloud trails both Amazon and Microsoft in the cloud computing space. Increasing competition in both the markets might have hurt its top-line growth in the to-be-reported quarter.

The company continued to face data privacy challenges in the quarter. In addition, increased spending on its consumer gadgets, YouTube video app and cloud computing services is anticipated to have been a risk. Higher expenses are expected to get reflected in its bottom-line number.

Earnings Whispers

Our proven model does not conclusively predict an earnings beat for Alphabet this time around. The combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) increases the chances of an earnings beat. But that is not the case here.

Earnings ESP: The company has an Earnings ESP of -3.27%. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

Zacks Rank: Currently, Alphabethas a Zacks Rank #3.

Stocks That Warrant a Look

You may consider the following stocks that have the right combination of elements to beat on earnings in the upcoming releases.

Verizon Communications Inc. VZ has an Earnings ESP of +0.03% and a Zacks Rank #2. You can see the complete list of today’s Zacks #1 Rank stocks here.

Spotify Technology SA SPOT has an Earnings ESP of +26.98% and a Zacks Rank #3.

Advanced Micro Devices, Inc. AMD has an Earnings ESP of +6.54% and a Zacks Rank #3.

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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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