Alphabet Inc. (GOOG): investment thesis checklist
What a value investor writing down why they own Alphabet Inc. would be relying on, read from its filings: the figures that have carried the business, the lines a reader might set on them, and the published tests it meets today. A list to write against, not a view on the company.
1. The figures the case would rest on
- Return on invested capital: 23.8% in FY2025; between 14.7% and 28.3% over 8 filed years, median 23.8%. Does the thesis need it to stay inside that range?
- Return on equity: 31.8% in FY2025; between 8.3% and 31.8% over 10 filed years, median 20.8%. Does the thesis need it to stay inside that range?
- Free cash flow yield: 1.9% in FY2025; between 1.9% and 5.1% over 4 filed years, median 3.5%. Does the thesis need it to stay inside that range?
- EV to EBIT: 30.02x in FY2025; between 15.71x and 30.02x over 4 filed years, median 21.24x. Does the thesis need it to stay inside that range?
- Price to earnings: 29.03x in FY2025; between 19.46x and 58.13x over 10 filed years, median 26.49x. Does the thesis need it to stay inside that range?
- Gross margin: 59.6% in FY2025; between 53.6% and 61.1% over 10 filed years, median 56.8%. Does the thesis need it to stay inside that range?
- Operating margin: 32.0% in FY2025; between 20.1% and 32.1% over 10 filed years, median 26.4%. Does the thesis need it to stay inside that range?
- Net debt to EBITDA: 0.24x in FY2025; between 0.05x and 0.24x over 5 filed years, median 0.08x. Does the thesis need it to stay inside that range?
- Revenue growth, 5-year CAGR: 17.1% in FY2025; between 16.7% and 23.3% over 10 filed years, median 19.3%. Does the thesis need it to stay inside that range?
- Share count change: -1.7% in FY2025; between -3.3% and -1.7% over 3 filed years, median -2.2%. Does the thesis need it to stay inside that range?
2. What must stay true: guardrails a reader might set
Each line is drafted from Alphabet Inc.'s own current figure, never from a level we think a business should clear, and replayed over its filed years. They are a reader's to keep, edit or drop.
Debt to Equity stays at or below 0.2x
Today 0.16x. Replayed over 8 filed years, it held in every one.
Return on Invested Capital stays at or above 19%
Today 23.78%. This indicator depends on inputs (market price, multi-statement composites) whose history is not deep enough to re-derive it with the same formula as the live value, so no honest retro-test exists for it.
Dividend Rate stays at or above $0.87
Today $0.88. This indicator depends on inputs (market price, multi-statement composites) whose history is not deep enough to re-derive it with the same formula as the live value, so no honest retro-test exists for it.
3. What would break it
- A filed year in which debt to equity rose above 0.2x.
- A filed year in which return on invested capital fell below 19%.
- A filed year in which dividend rate fell below $0.87.
4. The published tests it meets today
Of 30 tests value investors published: 5 met, 25 not met, 0 we could not complete. Counts, never a score.
Meets: High returns and growth; ROIC at or above WACC; Z-score and coverage (Edward Altman); High returns, low debt; Cash-covered dividend.
What this cannot tell you
What the numbers say today, not the day one stops being true. The reasons are not written down.
An account adds
One email the night a number you wrote down breaks. Silence otherwise.
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How this is computedA computation on accounts filed with the SEC, not a recommendation and not advice. Past filings do not indicate future results. Risk disclaimer.