Google Impresses With Q2 Numbers

Search-engine Goliath Google (GOOGL - Analyst Report) has reported Q2 earnings after the Thursday bell, continuing a streak of 7 straight quarters of earnings misses. Google posted earnings of $4.93 per share (accounting for traffic acquisition costs [TAC] and stock-based compensation) on revenues of $14.35 billion (ex-TAC). The top-line number was a beat; the Zacks consensus estimate was for $14.2 billion in the quarter.

Aggregate paid clicks reached 18 percent year over year, bettering the 14 percent expected. Cost per click quarter over quarter was -4 percent, beating the -5 percent we had anticipated. Website revenues reached +13 percent, just below the 14 percent in the Zacks consensus estimate.

These are solid numbers for new CFO Ruth Porat, who had made the move in May from Morgan Stanley (MS - Analyst Report). "Our strong Q2 results reflect continued growth across the breadth of our products, most notably core search, where mobile stood out, as well as YouTube and programmatic advertising," reads Porat's note in the company's earnings statement. Investors may also be eying the more than $60 billion in cash Google is currently hanging onto; would Porat be looking to put some of that cash back in shareholders' pockets? (The company paid out $522 million to Class-C shareholders in May.)

Google shares are actually trading at quite reasonable valuations, especially in the Internet space, about 17x forward earnings. And this after a now +10 percent rise in the share price over the past month alone, including the 7.7 percent blast given the shares in after-hours trading following the earnings announcement. Then again, 2014 was a flat trading year for Google -- and no great shakes in 2015 until a month ago, either -- who hadn't seen a positive earnings surprise in quite some time.

But growth is still the name of the game for Google; the profits are still strong, it's just that projected analyses are always a tad above where the reality seems to wind up. Clearly, investors found Google's Q2 to be good news, and besides, there are many different directions a giant like Google can go from here. No mention was made in the earnings statement about Google's fledgling programs like drivable cars or a remodel of Google Glass, but a solid Q2 report looks to be just what the doctor ordered, in any case.