Google Still Goes Lower

Last month, I asked the question, “How much is Google really worth?”

So how much should Google be worth? That’s hard to say. Let’s take a very basic look. Wall Street currently expects Google to earn $33.90 per share this year.

The S&P 500 is currently trading at 13.85 times this year’s earnings estimate. If Google were carrying that multiple, it would be about $470 per share.

However, Google is projected to grow its earnings faster than the overall market. Wall Street currently expects Google to earn $39.49 per share in 2012. The S&P 500 is going for 12.2 times next year’s estimate. So if Google carried that multiple, it would be $481 per share.

When I wrote that GOOG was at $535. Today it’s at $476.

The earnings estimates are basically unchanged. For 2011, Wall Street expects earnings of $33.88 per share, and $39.47 for 2012.

Google is now going for 14.1 times this year’s earnings and 12.1 times next year’s earnings. Compared with the S&P 500, this represents a value premium of 8.8% and 6.5%, respectively.

Posted by on June 23rd, 2011 at 11:57 am


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