Facebook Stock Analysis, Valuation (NASDAQ:FB)

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$172.17 $0.35 (0.2%) FB stock closing price Sep 20, 2017 (Closing)
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Facebook
Updated on : Sep 20, 2017
previous close
FB 172.2 (0%)
NASDAQ 6456 (0%)
Closing Price On: Sep 20, 2017
stock rating
RATING: ★★★★★★★★★★ (0/5)
Industry :
Internet Services
Sector :
Computer and Technology
5 Quarter Revenue
Revenue Growth
2017-Q2
$billion
%
YOY GROWTH
Compared to the industry
Long Term Growth
5 Year CAGR:
50.3%
Operating Profit
Operating Margin:
46.4%
Sector Average:
5.8%
5 Quarter Net Profit
Net Margins
2017-Q2
%
LTM Margin
Compared to the industry
Cash Flow
Operating cash flow:
$5.36B
Net Income:
$3.89B
PROS      CONS
Recent Growth
Long Term Growth
Operating Margins
Net Margins
ROIC
ROE
PE Valuation
PS Valuation
Rating: ★★★★★★★★★★ (0/5)
Relative Valuation
FB PS :
15.1
Industry PS :
2.7
Sector:   Computer and Technology.   *PE adjusted for one time items.
Other Metrics
Return on Invested Capital:
41.4%
Return on Equity:
22%
Free Cash Flow Margin:
42%
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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 (4.2/5)

Our Facebook stock opinion is based on fundamentals of the company. This Facebook stock analysis is based on latest 2017 Q2 earnings. The stock price analysis takes into account the company's valuation metrics.

Should you buy FB stock?

  • Facebook's revenue growth came in at 44.8% in 2017 Q2.
  • Long term revenue growth has been strong with a 5 year compounded annual growth of 50.3%.
  • The TTM operating margin was good at 46.4% for Facebook.
  • LTM Net margins were good at 38.8% for Facebook.
  • Facebook generates a high return on invested capital of 41.4%.
  • Facebook has a good Return On Equity (ROE) of 22%.
  • The company has a healthy free cash flow margin of 42%.

Should you sell FB stock?

  • Trading at a PE ratio of 38.4, FB stock is overvalued in comparison to industry average multiple of 26.2.
  • The company is trading at a price to sales multiple of 15.1, which is overvalued in comparison to the Internet Services industry average multiple of 2.7.

Comments on this video and Facebook stock

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