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Alphabet (GOOG, GOOGL) is now the fourth largest stock in the world by market cap (companiesmarketcap.com) at just below $2 trillion. But after its earnings report for Q3 released on Oct. 26, it seems clear that the stock is likely to keep on rising. This is despite the fact that it’s already up over 72% so far this year.
For one, its revenue shot through the roof. It made $65.1 billion in Q3 alone. That was up 41% year-over-year. This is more than many high-tech companies make in any one year.
But more importantly, its net income was up 68.4% over the prior yet. In short, this huge company is gushing forth cash.
In fact, you can see this in the company’s Cash Flow Statement. In fact, Alphabet simplifies things. On page 7 of the earnings release the company comes right out and shows that its free cash flow for the quarter was $18.72 billion.
This means that over 28.7% of its revenue flows straight into its cash pile, after including all its expenses. This includes some cash flows that do not even show up in the income statement, such as capital expenditures.
