Are Q2 Earnings the Beginning of a Bigger Turnaround for Alphabet?

Alphabet Inc. (NASDAQ: GOOGL | GOOGL Price Prediction) reported second-quarter 2019 results after markets closed Thursday. The search engine behemoth reported adjusted diluted earnings per share (EPS) of $14.21 on revenues of $38.94 billion. In the year-ago quarter, Alphabet posted adjusted EPS of $11.75 on revenues of $32.66 billion. Analysts were expecting EPS of $11.30 on revenues of $38.15 billion.

The Google segment posted second-quarter revenues of $38.78 billion, up from $32.51 billion a year ago. Operating income rose from $8.96 billion to $10.39 billion. The operating loss on Other Bets totaled $989 million, up from $732 million in the year-ago quarter.

Traffic acquisition costs paid to Google Network members fell by about two percentage points to 69% of Network revenues, or $3.62 billion. Payments to distribution partners totaled $3.62 billion, about 13% of websites revenues. Total traffic acquisition costs rose from $6.42 billion to $7.24 billion and represent a dip of 1% as a percentage of total advertising revenue.

Paid clicks on Google websites were up 28% year over year and up 9% sequentially. Aggregate cost per click fell 11% compared with the year-ago quarter and was down 1% sequentially.

Alphabet on Wednesday announced a $25 billion buyback program for its Class C common stock.

Alphabet did not offer guidance in its earnings statement, but analysts are looking for third-quarter EPS of $12.07 and revenues of $39.67 billion. For all of 2019, estimates call for EPS of $45.55 and revenues of $160.64 billion.

Alphabet shares have fallen nearly 12% since the competed last reported quarterly results in April primarily as a result of slumping ad sales. The company turned that situation around in the second quarter and the share price got a sharp bump in Thursday’s after-hours trading session.

Alphabet’s stock closed down about 0.3% Thursday at $1,135.79 but jumped by about 7.4% at $1,219.50 in after-hours trading. The stock’s 52-week range is $977.66 to $1,296.97 and the consensus 12-month price target is $1,335.22.

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