Meta Platforms (TICKER) Company Overview & Stock Price Forecast
This article provides a brief analysis and stock rating for Meta Platforms (FB) including an updated stock price target. Additional data on the company’s earnings yield, price/earnings ratio, return on invested capital and YTD performance are discussed as well.
Meta Platforms Fundamentals
Stock Price Target: $306.02
In the section below, we discuss the earnings yield, P/E, return on invested capital and YTD performance for Meta Platforms in comparison to the Software industry and the S&P 500.
Meta Platforms is a Mega Cap company with a Market Cap of $538.1B.
How are investors using Meta Platforms earnings yield to assess the company?
The earnings yield is used to show the percentage of a company’s earnings per share. Investors typically use earnings yield to determine which assets are underpriced or overpriced relative to other variables, like sector, industry or bond yields. Simply put, the earnings yield of a company can be used to assess how expensive a company is in relation to the earnings that are generated. When valuing companies, the SIS Research Group does not utilize the inverse P/E ratio to calculate the earnings yield. Instead, we use an adjusted earning yield calculation to capture variation amongst companies (i.e. debt and tax rates).
The current earnings yield for Meta is 10.70%, in comparison to 4.82% for the S&P 500 and 2.96% for the 10-year treasury bond. The median earnings yield for the Software industry is 4.87%.
What does Meta Platforms Price-to-Earnings Ratio (P/E) tell investors about the company?
The price-to-earnings ratio (P/E) is a relatively popular metric used by investors and analysts for valuing a company’s stock. The P/E ratio can be used to show how a stock’s valuation compares to other companies and the total market. Investors use the P/E ratio to determine what the market is willing to pay today based on a company’s past or future earnings. A high P/E ratio could mean that a stock’s price is too high relative to earnings, which could be a signal that a stock is currently overvalued. In turn, a low P/E ratio could indicate that a company’s current stock price is low relative to earnings.
Meta is currently trading at a P/E of 15.03. The P/E for the Software industry is 23.95 and the P/E for the S&P 500 is 20.76.
What is the current Price-to-Sales Ratio (P/S) for Meta Platforms?
The Price-to-Sales Ratio (P/S) looks at a company’s market cap and revenue to determine valuation. The P/S ratio is calculated by taking a company’s market cap and dividing by the total sales or revenue. The P/S ratio gives an idea of how much the market values every dollar of a company’s sales and can be effective in valuing unprofitable growth stocks or companies that are currently undergoing special situations or challenges. A lower the P/S ratio can be an indicator of good value.
Meta is currently trading at a P/S of 4.82. The P/S for the Software industry is 8.10 and the P/S for the S&P 500 is 2.62.
How does Meta Platforms Price-to-BookRatio (P/B) compare to the Software industry?
Price-to-book value (P/B) is the ratio of the market value of a company’s shares divided by its book value of equity (the value of it’s assets on the books). The book value is the difference between the book value of assets and liabilities. Typically, investors use the P/B ratio to assess if a stock is valued properly (a value of one means that the stock price is trading in line with the book value of the company). A company with a high P/B ratio could mean the stock price is overvalued as well as the converse.
Meta P/B ratio is 4.36. The P/B for the Software industry is 7.52 and the P/B for the S&P 500 is 4.08.
How attractive is Meta Platforms Return on Invested Capital (ROIC) to investors?
Investors use the return on invested capital (ROIC) to assess how efficient a company is at turning capital into profits. The ROIC is the amount of money a company makes on it’s investments that is above the average cost of debt and equity.
Investors can use the ROIC to provide context for metrics like the (P/E) ratio. For instance, when used in isolation a low P/E ratio could suggest a company is oversold but the decline could be because a company is no longer generating value for shareholders. Conversely, companies that consistently generate high rates of ROIC can plausibly trade at a premium compared to other stocks, even if their P/E ratios are high.
Meta ROIC is currently 26.54% in comparison to 23.77% for the Software industry and 9.10% for the S&P 500.
How has FB stock performed over the past year? What is the current analyst price target?
Over the past 52 weeks, Meta has traded between the range of $169.00 and $384.33.
The current Analyst Price Target for Meta is $306.02.
What is Meta Platforms YOY Performance in comparison to its industry and the total market?
The YOY performance for Meta is -42.25%. The Software industry has a YOY performance of -18.72% in comparison to the YOY S&P 500 performance of -2.23%.
Recent Financial Results (Q1, 2022)
- Ad impressions and price per ad – In the first quarter of 2022, ad impressions delivered across Family of Apps increased by 15% YoY and the average price per ad decreased by 8% YoY
- Capital expenditures – Capital expenditures, including principal payments on finance leases, were $5.55B for the first quarter of 2022
- Share repurchases – repurchased $9.39B of Class A common stock in the first quarter of 2022. As of March 31, 2022, $29.41B available and authorized for repurchases
- Cash and cash equivalents and marketable securities – Cash and cash equivalents and marketable securities were $43.89B as of March 31, 2022
Stock Price Target: $306.02
Meta Platforms, Inc. develops products that enable people to connect and share with friends and family through mobile devices, personal computers, virtual reality headsets, wearables, and in-home devices worldwide. It operates in two segments, Family of Apps and Reality Labs.
The company was formerly known as Facebook, Inc. and changed its name to Meta Platforms, Inc. in October 2021. Meta Platforms, Inc. was incorporated in 2004 and is headquartered in Menlo Park, California.
This material is provided for informational purposes only and is not financial advice. The information contained herein should not solely be used for the formation of an investment decision, whether you are a long term or short term investor.