Fundamental analysis of Alphabet Inc. stocks

Senglong Pin

Master's thesis

Abstract:

This diploma thesis evaluates the financial health and intrinsic stock value of Alphabet Inc., with the study period from 2018 to 2022. The thesis is divided into two segments, theoretical and practical part. Both qualitative and quantitative methodologies are applied. With the application of fundamental analysis techniques, including vertical and horizontal analyses, ratio analysis, and the stock evaluation method both Discounted Cash Flow (DCF) and Book Value Per Share (BVPS), the study aim to reveal whether or not the company stock is properly valued. The findings conclude that Alphabet is in a solid financial position based on the outcome of liquidity being remarkable over the benchmark, exceptional profitability, strong solvency with a low debt-to-equity ratio and significant interest coverage. Alphabet’s intrinsic stock value based on DCF result was $154.45 per share while the market price was $88.23 in 2022 meaning that the stock was highly undervalued. Surprisingly, the value which came from BVP was only $19.61 which appears to be due to the limitations of traditional balance-sheet metrics not capturing the hidden potential of growth-oriented tech firms. Despite this contrast, all other findings such as financial metrics, DCF valuation, macroeconomic context, and expert opinions point out positively toward Alphabet as an attractive and compelling investment opportunity.

Keywords

stocks, intrinsic value, discounted cashflow, trend analysis, fundamental analysis

Language used: English

Date on which the thesis was submitted / produced: 2. 12. 2024

Thesis defence

• Date of defence: 5. 2. 2025
• Supervisor: Ing. Karel Malec, Ph.D.
• Reader: Joseph Phiri, externi

Czech University of Life Sciences Prague

Faculty of Economics and Management

Master programme:
Economics and Management