The market downturn has not been kind to Google. It hit a high of nearly $750 back in November of last year. But since that time, it has fallen by nearly 50% to it’s after-hours price of $389.
And yet even with the economy in turmoil, Google managed to turn in some solid numbers, with earnings well above estimates. With Google commanding over half of the search market and making money off of almost everyone through Adwords and Adsense, they’re arguably the 900lb gorilla of the search space.
But is it a buy at this price? Well, with their current cash flow, they’re tracking to hit about $7 billion in free cash flow on an annualized basis. With their current enterprise value of about $100 billion, that means that the stock is trading for about 15 times cash flow. At that price, it’s probably valued about right.
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