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Technology Stocks : Alphabet Inc. (Google)

GOOGL 307.17

+1.6%

3:59 PM EST

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To: Lizzie Tudor who wrote (3911)	11/6/2005 1:49:26 PM
From: Lizzie Tudor	Read Replies (1) of 15857

I found Google's last 12 months' earnings and next five years' forecast annual earnings growth on Yahoo's Key Statistics and Analysts Estimates reports. Find them from the Yahoo Finance page (finance.yahoo.com) after getting a price quote. According to Yahoo, Google's last 12 months' earnings were $3.41 per share, and it's expected to grow earnings at a 32 percent annual clip during the next five years. I used those numbers, and estimated that after the first five years, Google's growth would slow to a 10 percent annual rate. I used Money Chimp's suggested 11 percent discount rate, which corresponds to the S&P 500's long-term average annual return. Based on those numbers, Money Chimp said Google's fair value was $922 per share. Then, I recalculated Google's fair value making two relatively modest changes. I cut my forecast for the next five years of annual earnings growth to 25 percent, and I increased my annual return requirement (discount rate) to 15 percent. Surprisingly, those changes cut Google's fair value down to only $136 per share. sfgate.com

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