The Meteoric Rise of Meta Platforms (META)
Investors, have you been tracking the trajectory of Meta Platforms (META)? Lately, shares have been on a steady ascent, with an impressive 23.6% increase over the past month. The stock recently soared to a new 52-week high of $489.99, further solidifying its upward trend. Comparatively, Meta Platforms has seen a substantial 37.3% surge since the beginning of the year. This growth significantly outpaces the Zacks Computer and Technology sector’s 9.7% movement and the Zacks Internet – Software industry’s 17.5% return.
Driving Forces Behind the Success
What has been propelling this remarkable outperformance? Meta Platforms boasts a track record of consistently exceeding earnings projections, not falling short in any of the previous four quarters. In its latest earnings report on February 1, 2024, the company reported an EPS of $5.33, surpassing the consensus estimate of $4.83.
For the current fiscal year, analysts anticipate Meta Platforms to achieve earnings of $19.78 per share on revenues of $158.75 billion. This reflects a notable 33.02% uptick in EPS and a 17.68% rise in revenues. Looking ahead to the next fiscal year, the company is projected to earn $22.94 per share on $179.75 billion in revenues, signaling a year-over-year shift of 15.99% and 13.22%, respectively.
Assessing Valuation Metrics
Despite reaching a 52-week pinnacle, questions linger about the future prospects of Meta Platforms. One essential aspect to consider is the company’s valuation metrics to ascertain whether it has surged ahead of its intrinsic value.
Examining the Zacks Style Scores provides investors with additional insights for evaluating stocks beyond just the Zacks Rank. These scores, ranging from A to F, cover categories such as Value, Growth, and Momentum, culminating in a combined VGM Score. Investors can leverage this tool to discern the most suitable Zacks Rank stocks based on their individual investment style.
Meta Platforms presently holds a Value Score of D. Meanwhile, the company garners Growth and Momentum Scores of B each, resulting in an overall VGM Score of B. In terms of value breakdown, the stock is currently trading at 24.6X the current fiscal year EPS estimates, which is below the peer industry average of 31X. In trailing cash flow terms, it sits at 24.7X compared to the peer group’s average of 18X. Moreover, Meta Platforms sports a PEG ratio of 1.26, indicating that it does not rank among the top tier of stocks in terms of value.
Evaluating Zacks Rank
Among the myriad factors at play, the stock’s Zacks Rank often takes precedence over style scores. Fortunately, Meta Platforms presently enjoys a Zacks Rank of #1 (Strong Buy) fueled by the surging earnings estimates.
Given the recommendation to opt for stocks with Zacks Rank of 1 (Strong Buy) or 2 (Buy) coupled with Style Scores of A or B, Meta Platforms appears to meet the criteria. Therefore, it appears that Meta Platforms holds promise for potential growth in the foreseeable future.
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