Size Matters: Google Larger Than Wal-Mart and Buffett (GOOG, WMT, BRK-A, BRK-B)

24/7 Wall St. maintains a proprietary list of stocks, The 24/7 Wall St. Real-Time 500.  This is more representative than the S&P 500 based on free-float market caps each year and updates much more often than the Fortune 500 that tracks the top 500 by revenue at the start of each year.  We look at this list routinely for insight about market caps relative to performance, and now that earnings season is peaking there is a clear picture.  If you tally up the market capitalization rates, Google Inc. (NASDAQ: GOOG) is larger than both Wal-Mart Stores, Inc. (NYSE: WMT) and Berkshire Hathaway Inc. (NYSE: BRK-A) (NYSE: BRK-B).  While trailing 12-month data is looking backward rate than forward, it does give at least some basic comparison data.

Google’s snapshot this morning gave a market cap of $196.3 billion and its trailing 12-month revenue was listed as $23.65 billion.  Wal-Mart’s data showed a market cap of $195.83 billion with trailing 12-month revenues of $408.21 billion.  Berkshire Hathaway is always hard to pick because of the two classes, but the market cap was listed as $188.3 billion with trailing 12-month revenues of $112.49 billion.

Obviously, there is no way to draw a comparison on revenues alone.  Berkshire Hathaway is a conglomerate  and it has a giant virtual mutual fund full of public stock holdings.  Wal-Mart is the revenue king by a mile, but retail operates on low margins and is all about price.  At least at Google, Internet margins are extremely healthy and each dollar of revenue generates large earnings versus a few cents elsewhere.  It used to be that investors were discussing the possibilities of $1,000.00 on Google ultimately.  That would represent further gains from current prices of about 62%.  If the share count were to remain static, that would give Google a market cap of roughly $317 billion.  That would make Google as the second highest in the U.S. by market cap if other shares all remained static.

You cannot just arbitrarily say that Google is overvalued because it is worth more than these other giants.  Google also has far larger growth opportunities down the road.  Still, these are interesting times when you look at how the world values companies.

These figures may differ slightly from source to source.  the Real-Time 500 is powered and implemented by Interactive Data Managed Solutions and market data is provided by Interactive Data. The company fundamental data powered by Morningstar.

JON C. OGG