 Welcome to the channel. This is reliable Rudy in this video. We're going to analyze everything monies take on Google. I did post my Evaluation on Google yesterday and look through some of the financials and stuff like that and I'm simply going to watch this video It's a 10 minute video. I've watched a little bit of it And this is where I had originally just disagreed with one of the things that was state and I thought to myself Okay, let's go and make a video on this and state my opinion on some of the things now. I'm not just going to be bashing I hope I'm not just bashing them the entire video But nonetheless, I do think that everything money teaches a process. That's very good for new investors and Definitely not one of the there's definitely worse YouTube channels out there and everything money 100% I've gotten a lot of value out of everything money itself I'm not a huge fan of some of the videos of course, but nonetheless We're going to match my evaluation up with their evaluation for Google now Also, I'm not a licensed financial advisor everything this video contains only my opinion as for entertainment purposes only But we are going to analyze this and we'll see what we think credible business high cash flow 10 minute actually owns the online world of advertising they do such a great job Oh, and by the way, they on the top two search engines in the world Google dot-com and YouTube dot-com you don't realize it But YouTube comm is the second largest search engine in the world whenever anybody wants to learn anything Where do they go? They go to YouTube comm you're here right now learning very true me With us from YouTube comm so let's go check out Google in our software So if you have our software, please follow along the great way to get better So Google's down it just recently split 20 for one. That's why the price is at 115 I'm going to talk about the stock split in my charting video I'm going to match some of the stuff up with the chart and share my opinion on how Google how I think Google is kind of using it for a strategic I Mean everything in the end any decision made by a company There's a strategic thing that they're trying to get out of it, of course So I'm going to touch base on the stock split And it's down 2% today It is a low day in the market But this is something to understand that when the most overpriced company when market goes down Overpriced companies tend to drop the most less overpriced to drop the least so we're going to see what Google Okay, this is the comment that I originally just Sort of disagree with now He does say that it tends to to drop more for overvalued companies and to an extent he is probably right But we're talking about one Trading day we're talking about the price action of a company over one day I guarantee you go out in the market and there's overvalued companies that were even green in the day on Friday and Just touching base back Google was down 5% on Friday That is a pretty solid move for Google and just matching that up with the the shares outstanding It is very hard to move 13 billion shares I mean there's so many more things that go into the price action for a company in one particular day and Ultimately it's supply and demand if more people want to buy than sell the price is gonna go up if more people Want to sell them by it's gonna go down To state a very vague statement like that I think is a the wrong way of looking at things but to an extent I do kind of agree with them But I just don't like the way they says it So that's why I'm making the video on this just for that one statement. So up until this point I do not know what what it holds in store for me going forward, but yeah, let's go and continue this video Dan's in that level in spectrum So over the last year they hit a high of 150 Which was 3000 a share before the split in a low of 101 We're in a touch base on that split share the look before the split So it's on the lower end of that range right now No dividend, but some very interesting aspects high return on invested capital Very good profit margin gross margin of 57% and overall profit margins that are very consistent over the last five years We have a five-year profit. Okay a couple things that I want to stay with that He mentions a high return on invest capital 22% But doesn't say anything about the disconnect from the five-year average. I guarantee I go to return on invest capital right now I know because I looked after I made my video Yeah, we're taping Google right here And we just look at this return on invest capital real quick and we'll get back to the video 18 from 2010 basically up until this point very consistent in their return on invest capital and then these last two years year-to-date and 2021 25 percent and 25 percent. I Mean, can you just look do I think that they're going to put up that high return on invest capital looking at their previous years? No, no, I don't so I do think that they're Definitely things wrong and looking at that when I see a disconnect in that 22 to 14 I definitely want to go and look at that guys. You can't just assume. Oh, they put up 22% in the last year They're going to continue that. I think I think it's important to go and look at those particular things And what did he say about and what did he say about the profit margins right there? Sorry guys, I'm gonna rewind it a little bit right there Very good profit margin gross margin of 57% and overall profit margins that are very consistent over the last five years Okay, he says that the profit margins are very consistent and looking at the metrics It's very easy to say that if I go back and look at the metrics right here It's very easy to look at this and say, oh, yeah over the last five years very consistent profit margins right in line Nothing nothing to worry about right there guys, right? Well, let's go look at the profit margins. We just go over It's very simple. Here is the last five years. Here's 2017 the 2021 they go from 11% profit margins the 29% is that consistent profit margins guys 2020 2020 and 2021 boom huge increase and I mean, is this consistent guys? You think this is consistent? This is why looking at just simple five-year metrics. It can be very misleading Especially when you're talking about the years 2020 and 2021 I got this I got a disagree with how he evaluates that that profit margin right there Gotta disagree five-year profit margin of twenty three point two percent and the last year's profit margin of twenty five point nine So let's go to our eight pillars tab real quick to give the recap of our eight pillars now You'll see right here two things stand out Two X's the first and last pillar. These are our valuation metrics valuation Valuation and how I match valuation up is based off of growth. I don't know what he's gonna say right here But I'm sure I'm going to have to touch base on something that he says I've your price of free cash flow 34.7 and 37 pretty much on the nose. Okay That's immediately next because we want both those numbers under 22.5 What does that mean? We shouldn't buy the company. Well, hang on a second Just remember if Google were able hypothetically to grow its revenue and profit by 30% or more per year for the next 10 years I would absolutely buy these these companies company right now and those more if Google grows by 30% Yes, Google is a screaming buy right now. I 100% agree with that but also real quick. He did not touch base. He's using a five-year number here I'll show you guys. Here is a five-year metrics right here I've already stated that the five-year numbers are definitely skewed based off 2020 and 2021 in my opinion I think they're skewed He does not talk about the disconnect in the one-year PE if I go over and I look at go back over the revenue Yeah, would I pay 30 plus? He states it himself. Would I pay 30 plus if they're getting this growth? Yes, the market has a natural way of pricing and valuation for companies and it's not always right It's not always correct But as you see the growth is slowing people are going to pay a less premium People are going to pay less PE doesn't make sense that their five-year numbers based off some of those growths that they had the growth that they had in 2020 and 2021 doesn't make sense to pay this PE. Yes, but their current PE is 20 It's it's already sort of pricing in that decline in growth But let's let's keep listening to it because the multiples are contingent on what? It's contingent on growth and moat. I think we'd all agree that he states it right there It's it's contingent on growth and moat and I don't think it's out of it's it's out of the question that Google has the moat I mean if I were to go pull up Google's brands, I mean they have a ton a ton of brands It's not just Google and YouTube the two top search engines as he states They have so many brands guys, but yes, he states himself. It's based off growth We're looking at the growth right here. Would I pay that 30 PE for this type of growth? Yes, would I pay it for this growth? No, I wouldn't That Google has quite the moat when it comes to online advertising and YouTube. It's gonna be hard to take them over But do they have the growth potential on them? I don't know So Google's also buying back some shares, which I'm not really a fan of in this model When companies are expensive have high PEs. I can already tell you guys right now I'm gonna I'm gonna disagree with them on this statement because I've already thought about the amount of shares that they're buying back But we're gonna listen to what he says right here, and then I'm gonna share my opinion We don't want the company buying back shares buying back shares is very attractive for companies because it can boost the earnings per share And it's actually good for investors if you're buying back shares of a company giving the investor a bigger piece to pie However, when they're buying back their shares and their shares are expensive. They're overpaying for stock Even if it's their own company, it's like buying another company at a much higher price So I don't really like that too much. Okay, okay, we're gonna touch base on some stuff So he states that okay, it's I do agree with his message You do not want your company's buying back shares when their company is overvalued you do not want that But we've already stated that the return on equity the money they're getting from shareholders The money they're getting from issuing shares of money that they're using to buy back shares They can invest that they can use that money and get a solid return on equity right there Also, they're not paying a dividend. We're talking five-year average of 40 billion Even though I think that some of those numbers are skewed over the last five years They brought in 40 billion every single year and free cash flow. Where are they supposed to put that money? Just sit on 200 billion dollars worth of cash. They're not paying a dividend. They're very low on debt. I Am okay with them you buying back 5% of their shares. That is not a Over a drastic amount of share buybacks. I mean you look at some companies are buying back 20% plus their shares that Potentially, okay, if they're buying back 20% of their shares at an overvalued rate. Yeah, I'm wrong with that But then you add in high inflationary times depreciating the value of the dollar you Year-over-year the value that every year the value of the dollar is going to decrease You don't want your company sitting on 200 billion dollars of free cash flow. I want them in Here's another point. I mean, I there's so many points. I can go off of this if they weren't okay Let's look at the free cash flow real quick. You can see this repurchases capital stock I guarantee if they weren't repurchasing capital stock like this the stock of Google would have hammered much more than I did guys I promise you that it would have over this time period if they weren't buying back stocks. They naturally took care of their shareholders in a sense over this course of time by Weeding out that that those types of investors that potentially could be going short on the company because those people going short on the company They're fighting up against this type of free cash flow that the company's generating they're looking out for their shareholders by repurchasing capital stock and I Would I'm okay with that saying that they could be sitting on 200 billion dollars worth of cash in High inflationary times where the value of the dollars decreasing So I got a disagree with some of the statements that he says about about buying back shares I am okay with them buying back 5% of their shares when they're low on debt They're not paying a dividend. They got to find some way to utilize that cash I got a disagree with them level they can pay off all their long-term liabilities with one year of free cash flow That's incredible Increase of cash fully last five years of 44 billion increase of profit of 55 billion and increase in revenue of 154 billion so guys all around This is a company that screams by okay So so he goes on to this eight pillars and this is what he had did earlier as well He goes on to these eight pillars. He says okay, they're growing their net income Okay, they're growing their revenue, but doesn't actually go in and look at those individually It's very easy for me to go in to their income statement and look at their revenue over the last ten years and look at these Look at these massive increases in revenue guys It is it okay to just go on to an eight pillar stab and say oh, yeah There's revenue growth and in my video. I also state the net income look at these how consistent they are in that income Right here boom huge spike in that income boom huge spike in that income those are definitely red flags that need to be looked into and Just to simply go on this eight pillars tab and say oh, yep That's the net income growth that they have what circle it. It looks good I think that that is setting people up for failure right there with that going about it that strategy that way I buy buy once the price is the right price remember It's very possible to overpay for a good thing. In fact, that's usually what happens Stocks are a voting machine in the short run and a weighing machine in the long run Whatever is the most popular will get big price jumps in the short run But what matter is the long run so don't overpay for a company just because you love the company Don't fall for that trick don't overpay for a company because it's growing fast growth eventually slows So we need to use the tools that we have in our software Growth that does eventually slow as you get bigger But there are other there are other things that you need to look at in terms of just stating that vague statement I don't like how he states that and one of the simple ways that that you can look at is go to the free cash flow How do you know that one of these acquisitions that they're that they've made multiple acquisitions of isn't going to be a big driver in revenue? And for all for all we know Google can continue to grow at that rate I don't know but in the end being conservative is going to take the crown You know, let's actually I typed this in after I made my video yesterday companies owned by Google and I went down And I simply just looked at all their acquisitions Oh, yeah, right here lists of mergers and acquisitions by alphabet Wikipedia. This is from 2001 right here guys 2001 keep that in mind. We're just gonna scroll down. Look at all the acquisitions and this is the company that they're they're acquiring We're just gonna scroll down. We're only in 2010 right now still 2012 2013 They've acquired 250 different companies who who is to say that that those acquisitions aren't going to be big drivers in revenue? Yes, as you get bigger is harder But to just vaguely state that that your growth is going to slow because you're getting bigger There's a lot more things that you need to look into in turn than just vaguely stating that I Gotta disagree with but overall message. I do agree with it is harder to grow as you get bigger Where to determine all these things before we go do more research is done by the company So if you're new to this channel, I'm Paul. I'm a value investor as you can tell I don't want to overpay for things I want to sit there and use the quantitative aspects of a business to decide if I should go further and research it further In order to buy I don't believe in overpaying for hype for growth or any of these things We have over 1700 videos in our collection go watch them Especially from a year and a half ago when I was saying no to all the hype stocks that have now fallen 78 Okay, just a sales pitch to The people watching this video to hey We've we've done really good and they they do they make a lot of great videos And like I said their YouTube channel is a lot better than a lot of other But I mean everything they just said right there is just a sales pitch to continue watching the channel And I don't I don't blame them as they are very big and they're continuing to grow I don't blame them for doing that but everything they just stated in that it wasn't necessary in my opinion 8090% the ones that haven't I still think will fall eventually it just hasn't happened yet things like Tesla and Amazon And that's fine. But my goal 100% Tesla and Amazon in my opinion I shouldn't say a hundred percent in my opinion people that are investing large amounts of cash into into those companies are gonna Be in for a rude awakening. That's my opinion I do agree with them on that statement especially with Tesla and Amazon too, but Tesla especially It's to buy a dollar for much less when the market is mispriced the asset So now we've done this look at the eight pillars for Google So the next question is what price should I pay? That is why we have the stock analyzer tool because if you remember every investment is the present value of all future cash Okay, so he's getting ready to put in projections for a stock analyzer tool and me personally I just don't think that he's dove in enough to these financials to be able to get a clear Evaluation of the stock analyzer tool now his numbers might might be might be decent. I don't know what they're gonna be But I just don't think that he did enough of research He looked at the eight pillars and kind of stated a couple things and now he's in my opinion I think he's gonna go to the stock analyzer tool and Paul does have a natural way of being conservative But preaching the message that he just preached in the first however many minutes we watched I think he said and some of the people up watching his channel up for failure. That's that's my opinion Well, well, we don't know what the future holds all we can do is make assumptions and hope that our range of assumptions are accurate So we have the stock analyzer tool that we created in order to do this We first start with the number of years of analysis One to 20. I always pick ten now guys. I do like using ten sometimes I use five sometimes I use seven eight I don't know it just depends but most of the time I do use ten But I don't I don't know why that is I just I just like ten If you're serious about investing I want you to do me a favor I want you to re-watch this section a few times It's gonna go through my thought process of how I look at assumptions for the future. I want to be conservative I don't want to assume major assumptions Some of the mistakes I've seen in the past is what actually all mistakes I've seen in the past is when assumptions don't pan out Which is very frequent and people make gross assumption about the future that is where people get in a danger Look at Tesla right now. I think the assumptions made about the future are absolutely egregious So we want to make sure we're conservative and we find opportunities to buy when those conservatives some the price is selling for less Of those conservative assumptions make it out to be so Okay, so he's getting ready to put in some revenue numbers right here I would be shocked if Paul use anything near that 20% Honestly based off of everything that he stayed in this video I would assume he's probably going to use anywhere from 10 to maybe 18 Even though I think 18 is probably on the higher side But I would be shocked if he put in anything north of 20% in for these for these valuations revenue growth One five and ten years in the last ten years Google's done 21% a year last five years 22.4 and last year 26 so it actually looks like their speed Okay, if he's getting ready to make a pitch for using 20% I'm going to 100% disagree if he puts anywhere with 20% in for this I'm gonna have to disagree and I'm I'm going to disagree with that ball a rate of growth is increasing, but again, they're already huge So the faster and faster you grow the more you grow the slower and so you're gonna grow in the future so Okay, so that He's basically staying that since since it's a bigger company It's guaranteed that they're not going to be able to continue to grow I mean he didn't go into any of the acquisitions that they made it. It's very tough to say could they grow at that 20% I think that they it's possible for them to it's it's not out of the question for them But to vaguely state that there it's impossible to be able to continue growing it at the rate It is it is possible and you know for the revenue numbers He's getting ready to put in he hasn't looked at any of the recent revenue numbers They put up in previous years, so I do kind of disagree with the statement that he made right there because Acquisitions you never know. I just showed you guys 250 acquisitions that Google has made I mean it is possible for that for them to grow I'm not I'm not stating that it is impossible for them to be able to grow that just me being conservative He does state being conservative. I agree with some of the message that he's stating, but I don't know It's tough guys Okay, I like those numbers and like I said Paul has a natural way of adding conservative numbers in right there and I have nothing wrong with 8 through 14 But I do think there's more information that you got to look into before you were you were plugging in numbers for all We know they're gonna put up less than that. I mean we go look at Apple's revenue or Not Apple Google's revenue. This is very hard and very hard to see our To me it's unsustainable, but I mean you can already see right here that they're decreasing the amount that they're growing right here So I do agree with the numbers, but just how he got to those numbers is where I have a little bit of a disagreement with him All right now 14% revenue growth is still alive. Yeah 14 is a lot five or six years That's really really good. They'll take Google to almost four times more revenue in 10 years in this today So just keep that in mind before you think I'm being too conservative now for profit margin Like their revenue. Oh Boy, this is this is where he did not dive enough into if he's using profit margins over 25% this model in my opinion is going to be very skewed and You know, I don't know what numbers he's gonna put in right here But if he uses numbers over 25% because he does state earlier in the video that Consistent profit margins. I you know more than likely going to disagree with some of the numbers he puts in right here I mean if we go over the macro trends, this is not consistent not consistent If he uses numbers up here in these high 20s, I'm going to 100% disagree with the numbers I used to put it in right here You grow the profit margins getting better over time again. I Don't necessarily want to assume that profit margins continue to go up However, profit margins more likely to stay up than it is revenue growth because they can keep those margins Oh boy, here we go guys. We're at the end probably of a cycle of a good economy and growth Profit margins tend to be higher during these times Okay, I do I do agree with him With the with when he's talking about the economic time especially when we're talking about 2020 and 2021 But who knows maybe Google can prosper in these times Like he didn't dive into any of the profit margins But it would be very simple to go back and look at this and say yeah It's it's it's understandable that they that they're going to pull back and net profit margin But I don't know how he's able to determine that so Um, we he is getting to some of the points that I've made but just this is not consistent This is not consistent For my profit margin do 20 21.5 and 23 Free cash flow margin. Okay. I like I like those numbers. We'll listen actually going to do exactly the same thing because okay, so putting those numbers in he does state that He expects pullback in in the economy in general And that is where he's getting the pullback in numbers But I mean to be very easy to just simply go and look at their recent profit margins to be able to determine these numbers 20 to 23 I feel is very justified for for google But there are some scenarios where I might increase the amount of profit margin that I'm using for a company It all depends in just a vaguely state and not go over enough information on it I think it's the wrong way going but ultimately we got to around the same area that 20 those low 20s I like the low 20s for google Profit margin and free cash flow margins should be very similar to each other over long periods of time Just like earnings and free cash flow should be very similar over long periods of time that is next uh Okay, I don't I don't like that statement because Some companies are definitely different and their free cash flow margins are going to differ from their profit margins 100% I got to disagree with them there that in some scenarios There are going to be cases where you're going to use different profit margins and free cash flow margins 100% I got to disagree with them slightly on that or based on multiple earnings and free cash flow But I want you to remember We want the PE and price of free cash flow assumptions to be where we would assume that it be in 10 years not today Okay, I he's getting ready to put in PE right here and uh, honestly I used if we look at if we look at some of the numbers that I put, you know for that type of growth I I would pay that that 18 that's adding in a decent premium saying that it's google a fundamentally sound business I like the 18 the 2020 or to 22 for the PE based off these growth metrics I don't know what he's going to put in his his numbers are pretty similar right there for me Um, yeah, we'll see what he puts in right here The larger the company becomes the slower the growth is going to be And growth to me is one of the two most important parts of factoring in a PE the other one is moat I do agree the growth is questionable here for google No, I don't know many people who use any other search engines google is the dominant one And they also have youtube which you're watching us on right now the number two search engine in the world Okay, he's he's only talking about two brands out of the how many brands that google owns I mean this list that I showed right here is just their acquisitions This isn't going into any of the brands that they own they own a Very they own a lot more brands than just google and youtube guys World so google owns the top two search engines in the world that moat is solid They're simple and they're great But as they grow They're not going to be able to grow as fast in the future. So I don't like how he says that You can't just simply state that they're not going to be able to grow that much in the future They're not going to be able to do this. They're not going to be able to do that. You don't know Paul you do not know I want to go down on my assumptions for pe I'm gonna do 13 15 and 17 Now my design I think that pe is definitely too low, especially when you add in You're talking about google a fundamentally sound business if google can grow at this I would gladly pay this pe for google 100 percent I do not like the pe they use I would use a little bit higher Now I can see why he's being a little bit conservative adding in that margin of safety. I do I do like that Dired annual return Guys for a big coming like google with a great balance sheet. I'm okay with a 12 and a half percent return They have a great balance sheet load I would personally use 15 return. That's where I bake in my extra margin of safety 12 and a half percent. Okay, it's fine You're I have nothing wrong with that, but I would personally use 15 percent just to add that extra margin of safety debt And on a regular etf you can get nine or 10 percent So I want a little bit more. Okay. I would never state it like that We're we're on a regular etf. You can get nine or 10 percent. Yes. Yes, you can get nine or 10 percent But there there's so many different things that go into that It's simply to vaguely state that you're going to get nine to 10 percent on an etf I think is setting people up for failure. I I agree I'm gonna have to agree to disagree right here. That's it I think there's stuff wrong with that statement margin of safety and a reason for buying the stocks I do 12 and a half percent Now I'm gonna hit the analyze button When we scroll down below the stocks at 114 If it's all green that doesn't mean go out and buy everything. It means verify these numbers If you're not part of our community yet Okay, he talks about verifying the numbers. He talks about verifying the numbers I don't think that paul did enough research in looking through the financials to be able to put those projections up there Ultimately, we came to roughly the same numbers In a sense except for a little bit of disconnect in the pe But I don't think he put in enough Research to be able to put these projections I think preaching that message to the people watching his channel is gonna naturally set people up For failure now it might not naturally set them up for failure But I I think there's so much so a lot more to go into in terms of looking at the financials Then just simply looking at the eight pillars and then plugging in numbers for the company Join the community spend the less than a cup of coffee per day to get access to thousands of people who are talking about Here we go with another sales pitch towards the everything money software Now I will agree with them that I do get pretty solid value from the everything money software But if it's if it's used to the right if it's used the right way, you can definitely get very good Information from the software, but just another sales pitch that he's adding into his video I don't like I don't like the sales pitch in videos. That's just me personally, but yeah stocks every single day There's somebody in that community. There's lots of people in that community who've looked at google go learn from what they found It's better to do research as a whole than individually If it's all red it doesn't mean ignore it the stocks at 114 If it's pretty close, let's say the price is 100 then go add it to your watch list It'll get added to your watch list and it'll notify you through the app And through the website and through email when the stock is hit your your price list on the watch I do like that future with this software that I can just add something to the watch list And it'll notify me when it gets there. So even though it's a sales pitch I mean there is some good stuff that the everything money software does have to offer Okay, so hit the analyze button boom Low end 65 high end 137 in the middle of 95 Okay, so there you guys have it right there. Um, yeah pretty much the same areas right there. Um, I me personally, I just think I like the numbers that I use personally better. It's the same exact projections in a sense, but There was definitely some some some good points that I wanted to point out in terms of his evaluation for google And guys, I think there's a lot more information that you have to dive into before you plug just random numbers in We did come to the same conclusion But uh in a different fashion for sure What am I doing? I'm actually gonna add it. It looks like this is gonna be the end of it Yeah, adding it out hundred. I'd say that's that's that's a decent area I was gonna notify me to her dollars, but it's a great starting point. So if you'd like this great starting point, please This looks like it is going to be the end of this Yeah, um All in all, I I mean you guys heard my opinion on this. I'm not gonna reiterate any of the statements that I make Uh, yeah, that's my take on on paul's evaluation for google I had to disagree with him on some points, but ultimately we came to the same conclusion Uh, I hope you guys like the content in this video definitely longer than my normal videos If you guys don't want to watch it, you know, that's fine. That's up to you guys But yeah, we will see you guys on my next video where I go over the charting For google and yep. See you on the next one