Meta Platforms: Analyzing Recent Stock Trends and Earnings Estimates
Meta Platforms (META) has become a hot topic among investors on Zacks.com. Let’s delve into some key details that could influence the stock’s future performance.
In the last month, shares of this social media giant declined by -3.9%, contrasting with a +1.1% gain in the Zacks S&P 500 composite. During the same period, the Zacks Internet – Software industry, where Meta operates, saw a slight rise of +0.2%. What lies ahead for Meta’s stock?
Impact of Earnings Estimates on Stock Performance
At Zacks, we prioritize changes in a company’s earnings projections more than any other factor. The rationale is simple: a stock’s fair value hinges on the present value of its anticipated future earnings.
Our analysis revolves around the adjustments made by sell-side analysts regarding their earnings estimates, reflecting the latest business trends. Generally, when earnings estimates rise, the fair value of the stock increases, driving investor interest and leading to price appreciation. Research has shown a strong link between earnings estimate revisions and short-term stock performance.
For the current quarter, Meta Platforms is projected to earn $6.70 per share, a notable increase of +25.7% compared to the same quarter last year. Furthermore, the Zacks Consensus Estimate has improved by +6.3% over the past month.
The consensus estimate for the fiscal year stands at $22.53 per share, representing a substantial +51.5% change year-over-year, with a recent rise of +5.2% in projections.
Looking ahead, analysts forecast earnings of $25.08 per share for next fiscal year, suggesting an increase of +11.3% year-over-year, with a recent adjustment reflecting a +3.3% rise.
Our unique stock rating system, the Zacks Rank, suggests a clear indicator of short-term stock price movements based on earnings estimate revisions. Due to significant changes in the consensus estimate coupled with three other related factors, Meta Platforms is rated Zacks Rank #2 (Buy).
While earnings growth is vital for assessing a company’s financial health, revenue growth plays an equally significant role. Consistent earnings growth typically requires corresponding revenue increases, making revenue projections essential.
Meta Platforms expects a revenue of $47.03 billion for the current quarter, marking a +17.2% improvement year-over-year. Sales estimates of $162.97 billion and $186.69 billion for the current and next fiscal years indicate increases of +20.8% and +14.6%, respectively.
Last Quarter Performance and Historical Surprises
In the last reported quarter, Meta Platforms generated revenues of $40.59 billion, reflecting an +18.9% rise year-over-year. EPS for this period was $6.03, up from $4.39 a year earlier.
Star performers surpassed the Zacks Consensus Estimate of $40.21 billion, marking a +0.95% revenue surprise. The EPS exceeded expectations by +16.18%.
Notably, Meta has consistently exceeded consensus EPS and revenue estimates over the last four quarters, showcasing solid performance.
Valuation Insights
Investment decisions cannot be effective without considering stock valuation. It is vital to assess whether the stock is trading at a price that accurately reflects its intrinsic value and growth prospects.
Evaluating a company’s valuation multiples—such as price-to-earnings (P/E), price-to-sales (P/S), and price-to-cash flow (P/CF)—over time and against peers helps determine if a stock is fairly valued, overvalued, or undervalued.
The Zacks Value Style Score, which assesses both traditional and unconventional valuation metrics, rates Meta Platforms with a grade of C. This suggests that it is trading in line with its peers. To see more details about its valuation metrics, click here.
Final Thoughts
The insights shared here, along with additional data on Zacks.com, may help investors decide whether to heed the latest market discussions surrounding Meta Platforms. Its Zacks Rank #2 suggests a potential for outperforming the broader market in the near future.
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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.
