Google Inc (NASDAQ:GOOG) will report its Q4 earnings result on Tuesday, January 22nd. Analysts expect Google to report in-line Q4 results, capping what has been a successful year for both Search and Display advertising for the company.
Valuation is still reasonable with the stock trading at 9.2x EV/EBITDA and 16.9x P/E on FY 2013 estimates.
Analysts’ 4Q 2012 consolidated net revenue and EBITDA estimates are $11,741.6M and $4,936.2M (42.0% margin,) slightly below the Street’s average of $12,395.6M and $5,087.0M (41.0% margin). It’s important to note the wide range of Street estimates ($11.3B 13.2B for revenues). The disparity between analysts estimates and Street consensus is due to lower Licensing and Motorola revenues.
Analysts’ Google Sites and Networks revenues are in-line with Street consensus. However their EPS estimate is $10.01 vs. consensus of $10.61 (range of $8.78-11.91.)
Google Inc (NASDAQ:GOOG)’s share of U.S. Search remained above 66% throughout 4Q 2012, with Search query growth outperforming the overall industry rate (at -2% vs. -4% overall, according to comScore). It’s important to note that this data does not capture mobile or international, where most of the query growth happens. Analysts estimate Google’s paid clicks at +27% Y/Y and CPCs at -9% Y/Y (consensus is at +28% and -7.5%, respectively).
According to analysts’ proprietary channel checks PLAs, once free and popular, are now fee-based and very popular, particularly within Retail (one of Google’s largest verticals). PLAs, which seem to be more additive to adwords than cannibalistic, enjoy higher conversion rates, higher CPCs, and therefore could drive incremental spend on Google in 4Q 2012 and FY 2013.