Alphabet (NASDAQ: GOOGL) and Yahoo! (NASDAQ:AABA) are both large-cap computer and technology companies, but which is the superior investment? We will contrast the two companies based on the strength of their earnings, dividends, profitabiliy, institutional ownership, analyst recommendations, risk and valuation.
Valuation & Earnings
This table compares Alphabet and Yahoo!’s top-line revenue, earnings per share (EPS) and valuation.
|Gross Revenue||Price/Sales Ratio||EBITDA||Earnings Per Share||Price/Earnings Ratio|
|Alphabet||$94.77 billion||7.00||$31.21 billion||$27.55||34.79|
Alphabet has higher revenue and earnings than Yahoo!. Yahoo! is trading at a lower price-to-earnings ratio than Alphabet, indicating that it is currently the more affordable of the two stocks.
This table compares Alphabet and Yahoo!’s net margins, return on equity and return on assets.
|Net Margins||Return on Equity||Return on Assets|
Volatility and Risk
Alphabet has a beta of 1, indicating that its share price has a similar volatility profile to the S&P 500.Comparatively, Yahoo! has a beta of 1.82, indicating that its share price is 82% more volatile than the S&P 500.
This is a breakdown of current ratings and price targets for Alphabet and Yahoo!, as provided by MarketBeat.com.
|Sell Ratings||Hold Ratings||Buy Ratings||Strong Buy Ratings||Rating Score|
Alphabet presently has a consensus price target of $1,041.60, suggesting a potential upside of 8.69%. Yahoo! has a consensus price target of $49.48, suggesting a potential downside of 16.43%. Given Alphabet’s stronger consensus rating and higher probable upside, research analysts clearly believe Alphabet is more favorable than Yahoo!.
Insider & Institutional Ownership
34.4% of Alphabet shares are held by institutional investors. Comparatively, 82.2% of Yahoo! shares are held by institutional investors. 13.2% of Alphabet shares are held by insiders. Comparatively, 9.2% of Yahoo! shares are held by insiders. Strong institutional ownership is an indication that large money managers, hedge funds and endowments believe a stock is poised for long-term growth.
Alphabet beats Yahoo! on 10 of the 12 factors compared between the two stocks.
Alphabet Company Profile
Alphabet Inc. is a holding company. The Company’s businesses include Google Inc. (Google) and its Internet products, such as Access, Calico, CapitalG, GV, Nest, Verily, Waymo and X. The Company’s segments include Google and Other Bets. The Google segment includes its Internet products, such as Search, Ads, Commerce, Maps, YouTube, Google Cloud, Android, Chrome and Google Play, as well as its hardware initiatives. The Google segment is engaged in advertising, sales of digital content, applications and cloud offerings, and sales of hardware products. The Other Bets segment is engaged in the sales of Internet and television services through Google Fiber, sales of Nest products and services, and licensing and research and development (R&D) services through Verily. It offers Google Assistant, which allows users to type or talk with Google; Google Maps, which helps users navigate to a store, and Google Photos, which helps users store and organize all of their photos.
Yahoo! Company Profile
Altaba Inc. (the Fund), formerly Yahoo! Inc., is a non-diversified, closed-end management investment company. The Fund seeks to track the combined investment return of the Alibaba Shares and the Yahoo Japan Shares it owns. Alibaba Shares represent an approximate 15% equity interest in Alibaba Group Holding Limited (Alibaba), and its Yahoo Japan Corporation ((Yahoo Japa) Shares represent an approximate 36% equity interest in Yahoo Japan. In addition to the Alibaba Shares and the Yahoo Japan Shares, the Fund also owns the minority investments, all of the equity interests in Excalibur IP, LLC (which owns the Excalibur IP Assets) and the marketable debt securities portfolio. The Fund’s external investment advisors are BlackRock Advisors, LLC and Morgan Stanley Smith Barney LLC.
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