Alphabet Inc. (GOOGL) — Fundamental Analysis & Key Financial Ratios

Kaplio's reading: Alphabet Inc.

Updated on October 27, 2026 · accounts published on July 22, 2026

A highly profitable platform with rising margins and a very solid balance sheet

Alphabet trades at a P/E of 16.3 over the last 12 months, but without one-off investment gains it would be about 31.6, near its ten-year median of 31.0.

• Is Alphabet expensive or cheap? Its P/E of 16.3 sits below the sector median of 20.0, but without one-off gains it would be about 31.6.
• How is the business doing? Operating margin reached 33 % over the last 12 months, above the 26 % average of fiscal 2014-2025.
• How strong is the balance sheet? Debt is just 0.18 times equity, and fiscal 2025 net cash was $5.51 per share, 1.7 % of the current price.
• Does the dividend fit within the cash Alphabet generates? The fiscal 2025 dividend used only 13.7 % of free cash flow, far below the 80 % ceiling considered healthy for internet platforms.
• What to expect from the next earnings? Analysts expect EPS of $3.03 when Alphabet reports on October 28, 2026; it has beaten estimates in each of the last 8 quarters.

Is Alphabet expensive or cheap?

Over the last 12 months Alphabet trades at a P/E of 16.3. That is below the sector median of 20.0 and well below its ten-year median of 31.0. Most of that discount comes from accounting: 51 % of pre-tax profit came from outside the business, such as revaluations or sales of stakes in other companies. That money is real, but it does not come back every year. Without it the P/E would be about 31.6, in line with its decade median. On the earnings analysts expect for 2027 it is 20.7. Excluding those gains, EV/EBITDA is 22.5×. A free cash flow yield of 1.7 % also suggests the stock is less cheap than the headline multiple implies.

How is the business doing?

Over the last 12 months revenue grew 15.1 % and EPS grew 34.5 %, though EPS was lifted by the investment gains above. The operating margin of 33 % beats both fiscal 2025 (32 %) and the 26 % average of the twelve fiscal years 2014-2025, so the core business is becoming more profitable as it grows. The net margin of 55 % and the ROE of 51 % are inflated by the same one-off gains, so ROIC is the cleaner gauge. At 15.2 %, ROIC is 9.5 points above the sector median of 5.7 %. It has stayed above 10 % in 9 of the last 10 fiscal years, with 7.0 % in 2017 as the only miss.

How strong is the balance sheet?

Over the last 12 months debt-to-equity was 0.18 and the current ratio was 2.72, which leaves Alphabet plenty of room. In fiscal 2025, cash of $10.47 per share exceeded debt of $4.95, leaving net cash of $5.51. That equals only 1.7 % of today's price, so the balance sheet supports the valuation but does not explain it. The Altman Z-score of 15.0 is deep in the safe zone, and the Piotroski score is 7 of 9. Payouts to shareholders are small: the dividend yield is 0.3 %, and in fiscal 2025 the company paid out 8 % of earnings.

Does the dividend fit within the cash Alphabet generates?

In communication services, telecoms are judged on free cash flow and dividends. Internet platforms live on network effects and now on AI capex, so they are held to different thresholds. Alphabet clears most of them in fiscal 2025. Revenue per share grew 15.4 % a year over 2022-2025 against a 10 % bar, the EBITDA margin was 44.9 % against 30 %, and net debt was 0.2× EBITDA against a 1.5× tolerance. Capex took 22.7 % of revenue, close to the 25 % limit. The weak spot is a free cash flow yield of 1.9 %, under the 3 % healthy level. With capex this close to its limit, that yield is the figure to watch.

What to expect from the next earnings?

Alphabet has beaten EPS estimates in each of the last 8 quarters. On July 22, 2026 it reported $9.11 against $2.87 expected, a +217.4 % surprise and the largest of those eight. For October 28, 2026 the consensus is $3.03 per share. The 2026 EPS estimate of $20.60, from 41 analysts, has not moved in 30 days, and the revenue forecast has barely changed either. Of 83 analysts, 70 recommend buying, 10 holding and 1 selling. Much of recent profit came from investment gains, so the operating margin will say more about the quarter than headline EPS.

How this was prepared: the data comes from companies' official filings, collected by a professional provider, and from Kaplio's analysis engine (trailing-12-month ratios, 10 years of history and sector medians computed across US-listed companies). The text is written from that data alone, every figure is checked against it before publication, and it is reviewed when the company reports results. This is not investment advice.