Facebook Stock Analysis (NASDAQ:FB)

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$127.92 $0.05 (0.04%) FB stock closing price Jan 18, 2017 (Closing)
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Facebook
Updated on : Jan 18, 2017
previous close
FB 127.9 (0%)
NASDAQ 5555.7 (0%)
Closing Price On: Jan 18, 2017
stock rating
RATING: ★★★★★★★★★★ (0/5)
Industry :
Internet Services
Sector :
Computer and Technology
5 Quarter Revenue
Revenue Growth
2016-Q3
$billion
%
YOY GROWTH
Compared to the industry
Long Term Growth
5 Year CAGR:
49.4%
Operating Profit
Operating Margin:
42.3%
Sector Average:
4.8%
5 Quarter Net Profit
Net Margins
2016-Q3
%
LTM Margin
Compared to the industry
Cash Flow
Operating cash flow:
$3.58B
Net Income:
$2.37B
PROS      CONS
Recent Growth
Long Term Growth
Operating Margins
Net Margins
Cash Flow
ROIC
PE Valuation
PS Valuation
Rating: ★★★★★★★★★★ (0/5)
Relative Valuation
FB PS :
14.9
Industry PS :
2.4
Sector:   Computer and Technology.   *PE adjusted for one time items.
Other Metrics
Return on Invested Capital:
25%
Return on Equity:
15.8%
Free Cash Flow Margin:
35.4%
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Facebook Analysis Video

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Our Facebook stock analysis covers the fundamental, valuation and peer analysis of the stock. The company which made Mark Zuckerberg the second youngest self-made billionaire went public on May 18, 2012. In our Facebook stock analysis, we cover financial details and other important events affecting this online social media and social networking service giant.

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Facebook Inc Stock Rating (4.1/5)

Should you buy FB stock?

  • The Year Over Year (YoY) revenue growth for Facebook was 55.8% in 2016 Q3.
  • Revenue growth has been tremendous with a compounded annual growth of over the last 5 years.
  • The TTM operating margin was good at 42.3% for Facebook.
  • Net margins came in at average 30.3% for Facebook over the last twelve months.
  • The company has an operating cash flow which is 1.5 times the net income.
  • Facebook generates a high return on invested capital of 25%.
  • Facebook has a good Return On Equity (ROE) of 15.8%.
  • Facebook has a healthy FCF (Free Cash Flow) margin of 35.4%.

Should you sell FB stock?

  • FB stock is trading at a PE ratio of 45.7, which is worse than the industry average multiple of 25.5.
  • The company is trading at a price to sales multiple of 14.9, which is higher in comparison to the Internet Services industry average of 2.4, making FB stock expensive.

Comments on this video and Facebook stock

pragspec on Facebook stock analysis ($94.42)
bullish
Overall bullish: Technically strong though going through short term consolidation with a intermediate flag like bullish formation. This is the wrong stock vehicle for those that seek to determine valuation via price per book and similar metrics. Hiccups do occur and security and click frauds are a real problem. It - cyber security - will be managed. I can not imagine an environment in which the internet stopped growing as a social and economic media. Therefore I am long term betting on the likes of FB. I expect to see a break of the old highs by the Oct. 2015 quarterly report. My year end target is $110-$115 barring any significant economic impact from a too aggressive Fed, too strong a $, and marked deterioration in commodities (metals and Crude).
reply
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lisajohn on Facebook stock analysis ($67.24)
bullish
While Whatsapp acquisition is a risk, Risk is something to live with during the growth stage. Without risks FB cannot give huge returns. The complete view of the acquisition http://seekingalpha.com/article/2101483-...
4 4 reply
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neena@amigobulls on Facebook stock analysis ($68.83)
bearish
FB
The current valuations factor in a high rate of growth. Add to this the questions being raised about the click frauds on Facebook and we sure don't like the risk/reward profile of the Facebook stock. This is perfectly highlighted by the author in the article at http://seekingalpha.com/article/2070353-...
6 3 reply
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oracleofwallstreet009 on Facebook stock analysis ($69.8)
bearish
Another of these Internet stories built on fancy words like number of users. Do people talk about valuations? Trading at Price-to-sales multiple of >20 and P/E of close to 120, The fundamentals supporting the stock price continue to remain weak with the current price factoring in a high rate of earnings growth. Even If Facebook does manage to outgrow its valuations, it will not result in super normal returns, until high earnings growth can be sustained for a long period of time. A correction in price should be expected going by current valuations.
6 5 reply
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topstocker on Facebook stock analysis ($72.03)
bullish
I think that might have something to with the fact that most internet companies struggle to make any material profits ! Twitter investors will love FB.
5 2

While doing a Facebook stock price analysis one needs to take a look at the various factors affecting the stock price. The company had a market cap of $104 billion at the time of its IPO, and went on to become one of the biggest internet IPO’s of its time by raising $16 billion. However the public offering turned out to be a disaster with various problems like Nasdaq glitches, insiders dumping stocks which accounted for 57% of the shares being sold, the lead underwriters hiking the price to $38, to name a few. Though profitable, the company did not have a clear mobile strategy at the time. The company has been posting impressive numbers Facebook revenue figures. We are more optimistic about our Facebook stock analysis especially when compared with other social sites like Twitter. Also, if one sees Facebook stock price history or for that matter Facebook PE ratio chart, one sees that the company has enjoyed premium valuations.

Facebook market analysis reveals that it is the most prominent social networking website in most of the English speaking countries like the US, Canada and UK.Some of Facebook’s main competitors include Google+, owned by Google (GOOG), LinkedIn (LNKD), Twitter (TWTR), Yelp (YELP), Groupon (GRPN), and Tumblr. It also competes with companies such as Pinterest, Snapchat, Flickr, and Myspace. Facebook owns a significant chunk of the mobile advertising market, and its share is expected to grow in the coming years at the expense of competitors like Google, according to many analysts. That’s got to sting for Google, which runs the world’s most popular mobile operating system and owns seven products with a billion users each. Facebook assets account for $21.65 billion as of 2015.

References:

Facebook IPO on Wikipedia

FB IPO Facts by WSJ

Analysis of Facebook by Amigobulls