Is Google A Good Pre-Earnings Play?

Google Inc GOOG GOOGL fell more than 1 percent on Wednesday, but is it worth buying ahead of the company's Q3 results?

"Google looked to me like it was set up to be a pre-earnings play," Sean Udall, CIO of Quantum Trading Strategies and author of The TechStrat Report, told Benzinga. "Google has missed earnings three of the last four quarters. Interestingly, it hasn't really hurt the stock."

Udall said Google has convinced investors of this long-term thesis, which is that the firm will have more hits along the lines of YouTube and fewer flops like Google+.

"They might be due for a good quarter," Udall added. "A lot of times when a good company like this misses a few times, even if analysts still love it and are still raising their price targets, a lot of times they'll get more conservative with their estimates. In other words, the bar is probably easier for Google to jump over than it has been the last couple quarters."

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Pivotal Research Group analyst Brian Wieser is less enthusiastic. He does not expect Google to report anything out of the ordinary.

"They say so little on the earnings calls," Wieser told Benzinga. "There's no reason to believe that what we'll see is much different from what we've been seeing."

Keep An Eye On The Bottom Line

Rob Enderle, principal analyst at Enderle Group, has some advice for investors who are curious about Google.

"With Google you don't watch the top line, you watch the bottom line, 'cause Google can get out of hands with regard to a lot of these expenses," Enderle told Benzinga.

"If they all hit in a given quarter, suddenly the bottom line goes iffy. It's really hard to predict. Top line should be fine, but the bottom line will depend on how crazy they went with expenditures in the quarter. That's what you've gotta watch with them."

Patience, Please

Patrick Moorhead, president and principal analyst at Moor Insights & Strategy, thinks Google is taking advantage of investors' patience.

"As long as they keep bringing home the good earnings, they can do forays into all these different science projects," Moorhead told Benzinga. "And the reason for the science projects is because really Google was throttled with growth and they're trying to create that next opportunity.

"Price per ad placement is actually going down, so they're trying to spread the wealth. It will be very interesting to see how they're doing on the mobile side, because I do see Apple picking up here to the detriment of Android."

Disclosure: At the time of this writing, Louis Bedigian had no position in the equities mentioned in this report.