Diamonds and Dogs

7/26/19

It's a Google kind of day. Alphabet/Google (GOOG) is trading up 10%, its biggest one-day gain, thanks to strong earnings and a $25 billion share buyback. Google easily surpassed estimates by 24% as sales rose 22% to $38.94 billion. Sales were led by ad revenue as nearly every key metric surpassed estimates. Going forward, Google is touting new growth at its cloud unit, a high-margin business. CEO, Sundar Pichai, has big ambitions to eventually generate more revenue from the company's cloud business than its mainstay ad business, expecting sale to triple over the next few years. Cash generation remains strong with over $30 billion free cash flow for the year. Google authorized a $25 billion buyback, double the $12.5 billion share repurchase announced back in February. At least seven upgrades with price targets as high as $1450 a share.

Illinois Tool Works (ITW) missed the mark. The tool company stock is down 2% after missing estimates by 7 cents, missed on revenue and guided full year estimates below consensus due to a deceleration in demand across their portfolio relative to the demand levels at existed at the end of the first quarter. Chief Executive E. Scott Santi said in a statement he expects a strong second half of the year, but adjusted its guidance to better reflect the current demand environment.