Google just smashed Q2 2015 earnings estimates. After more than a year, Google is back on top.
Cost control along with YouTube growth account for Google’s upswing.
Putting cost control measures in place is a balancing act, especially with a company like Google. On the one hand, Google needs individuals who will stop at nothing to make the “next big idea.” On the other hand, however, you need that nagging voice of realism that says “We can’t spend that much. Find another way.”
Google may have found its cost control solution. In May, Ruth Porat joined Google Inc. (NASDAQ:GOOG) (NASDAQ:GOOGL) as its new Chief Financial Officer. While Q2 2015 revenues were in line with forecasts, earnings per share beat expectations. This is a clear indicator that Porat is improving efficiency.
In summary, according an article just published on Seeking Alpha:
The key takeaway is that Google margins and hence earnings estimates are headed higher. The stock is no longer an extreme value, but investors should expect solid returns inline with earnings growth rates that probably average 20% over the next few years as YouTube and other products continue growing.