Alphabet (NASDAQ: GOOGL) is set to report its first-quarter earnings results on Thursday, April 25, after the market closes. The company has outperformed the Nasdaq 100 index so far this year, with its shares rising 11.9%. However, Alphabet still lags behind Microsoft, Apple, and NVIDIA in terms of market capitalization, with a current valuation of $1.95 trillion.
Analysts are expecting Alphabet to report solid first-quarter results. Truist analysts recently raised their price target on the stock to $170 from $158, citing the company’s strong balance sheet and material free cash flow generation. Bloomberg data estimates that Alphabet will have $83 billion in free cash flow in 2024.
One of the key things to watch for in Alphabet’s earnings report is whether the company announces a dividend. Meta Platforms announced its first-ever dividend in February, and analysts believe that Alphabet could follow suit. Andrew Zamfotis, portfolio manager at Ami Asset Management Corp., told Bloomberg News that a dividend announcement from Alphabet would be “well received.” While investors still expect growth from these companies, Zamfotis said that there is also value in cost discipline. A dividend announcement would suggest that Alphabet’s management is committed to balancing growth with capital return.
Alphabet has traditionally relied on stock buybacks to return capital to shareholders. The company is currently working through a $70 billion stock buyback authorization and had $36.3 billion remaining on the plan at the end of 2023. While Alphabet is expected to re-up its share repurchase plan, a dividend announcement could also be forthcoming given its strong cash flow.
