GOOGL – Market expectations are for Uniform ROA to improve, but management may have concerns about on-site purchases and Google Cloud

• Alphabet Inc. (GOOGL) currently trades near corporate but above historical averages relative to Uniform earnings, with a 21.2x Uniform P/E (Fwd. V/E’).
• At these levels, markets are pricing in expectations for Uniform ROA to improve to 27%, accompanied by 9% Uniform asset growth.
• Similarly, analysts expect Uniform ROA to expand to 30% in 2022, accompanied by 11% Uniform asset growth.
• If sustained going forward, these levels would imply a stock price closer to $3,314, representing approximately 16% equity upside for the firm.
• However, the firm’s most recent earnings call suggests management may have concerns about on-site purchases and Google Cloud.