Facebook Stock Analysis, Valuation (NASDAQ:FB)

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$177.36 $2.6 (1.44%) FB stock closing price Feb 16, 2018 (Closing)
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Facebook
Updated on : Feb 16, 2018
previous close
FB 177.4 (0%)
NASDAQ 7239.5 (0%)
Closing Price On: Feb 16, 2018
stock rating
RATING: ★★★★★★★★★★ (0/5)
Industry :
Internet Services
Sector :
Computer and Technology
5 Quarter Revenue
Revenue Growth
2017-Q4
$billion
%
YOY GROWTH
Compared to the industry
Long Term Growth
5 Year CAGR:
51.5%
Operating Profit
Operating Margin:
49.7%
Sector Average:
5.3%
5 Quarter Net Profit
Net Margins
2017-Q4
%
LTM Margin
Compared to the industry
Cash Flow
Operating cash flow:
$7.67B
Net Income:
$4.27B
PROS      CONS
Recent Growth
Long Term Growth
Operating Margins
Net Margins
Cash Flow
ROIC
PS Valuation
Rating: ★★★★★★★★★★ (0/5)
Relative Valuation
FB PS :
12.7
Industry PS :
2.8
Sector:   Computer and Technology.   *PE adjusted for one time items.
Other Metrics
Return on Invested Capital:
44%
Return on Equity:
23.9%
Free Cash Flow Margin:
41.7%
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Facebook Stock Analysis

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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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Note: Amigobulls stock rating is our opinion based on the historical performance of the company's fundamentals. It is not indicative of the future performance of the stock.

Facebook Inc Stock Rating 4.3/5

Should you buy FB stock?

  • Facebook sales grew by 47.3% year on year in 2017 Q4.
  • Revenue growth has been tremendous with a compounded annual growth of 51.5% over the last 5 years.
  • Facebook had a healthy average operating margin of 49.7% over the last 4 quarters.
  • LTM Net margins were good at 39.2% for Facebook.
  • The company has an operating cash flow which is 1.8 times the net income. We see this as a positive signal.
  • Facebook's return on invested capital of 44% is good.
  • The LTM ROE of 23.9% for Facebook is attractive.
  • The company has a good Free Cash Flow (FCF) margin of 41.7%.

Should you sell FB stock?

  • FB stock is trading at a PS multiple of 12.7, which is a negative when compared to the Internet Services industry average multiple of 2.8.

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