HomeMost PopularDecoding the Enigma of Meta Platforms, Inc. (META): An Investor's Guide

Decoding the Enigma of Meta Platforms, Inc. (META): An Investor’s Guide

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What’s the Buzz About Meta Platforms?

Meta Platforms (META) has become the talk of the town, drawing the attention of investors and analysts alike. With its recent surge in popularity on Zacks.com, there’s no doubt that this social media giant is capturing the imagination of many in the market. But what lies beneath the surface, and what should investors be on the lookout for?

Over the last month, Meta’s stock has posted a modest return of +1.6%, trailing behind the Zacks S&P 500 composite’s +3.3% performance. The Zacks Internet – Software industry, of which Meta Platforms is a part, has seen a dip of 1.2% during the same period. The burning question remains – what trajectory is Meta Platforms likely to take in the coming days?

Earnings Estimate Revisions: The Key Driver

When it comes to analyzing a company’s future prospects, nothing holds more weight than the revisions to its earnings estimates. At Zacks, we firmly believe that the essence of a stock’s value lies in its anticipated future earnings. It’s the heartbeat of any investment decision and the primary force that dictates a stock’s fair market value.

By closely monitoring how analysts alter their earnings estimates based on market dynamics, we gain valuable insights into a stock’s potential trajectory. A surge in earnings estimates invariably leads to a surge in stock value, attracting investors and steering the price northwards. This indispensable correlation between earnings estimate revisions and immediate stock movements is well-documented in empirical research.

For the current quarter, Meta Platforms is anticipated to report earnings of $4.27 per share, marking a substantial uptick of +61.7% from the same period last year. The Zacks Consensus Estimate has edged up by +0.8% in the past month.

Looking at the full fiscal year ahead, the estimated earnings stand at $19.94 per share, indicating a notable uptrend of +34.1% from the previous year. This estimate has experienced a marginal increase of +0.6% over the last 30 days.

Zooming into the next fiscal year, a profit projection of $23.09 per share projects a growth of +15.8% from the preceding year. Within the last month, estimates have climbed by +0.8%. Boasting a robust audit trail, our exclusive Zacks Rank – a powerful stock rating tool – has awarded Meta Platforms a coveted Zacks Rank #1 (Strong Buy). Thanks to the recent surge in consensus estimates and three other critical factors, the stars seem aligned in Meta Platforms’ favor.

Visualize the coherent evolution of Meta Platforms’ forward 12-month consensus EPS estimate through the illustration below:

12 Month EPS

Unlocking Revenue Growth Potentials

While earnings growth remains a benchmark of a company’s financial robustness, revenue growth plays an equally pivotal role. Without a continuous revenue upsurge, a company’s earnings momentum would inevitably hit a snag. Hence, understanding a company’s revenue growth potential is of paramount importance.

For Meta Platforms, the consensus sales estimate for the current quarter stands at $36.07 billion, indicating a robust year-over-year uptick of +25.9%. Looking into the crystal ball, estimates for the current and upcoming fiscal years predict figures of $158.75 billion and $179.75 billion, respectively, translating to growth rates of +17.7% and +13.2%.

Past Performance and Surprise History

Noteworthy is Meta Platforms’ financial feat in the previous quarter, which saw revenue hitting $40.11 billion, marking a substantial leap of +24.7% from the past year. Meanwhile, EPS of $5.33 in the same period outstripped the $3 benchmark from yesteryear.

Exceeding the Zacks Consensus Estimate of $38.99 billion, the reported revenue rang in a delightful surprise of +2.87%. On the earnings front, the surprise factor stood strong at +10.35%. Meta Platforms has consistently surpassed the earnings estimates in the last four quarters, with each reporting period witnessing victory over consensus revenue projections.

Unpacking Valuation Insights

A vital piece of the investment puzzle, evaluating a stock’s valuation is a prerequisite to any investment decision. The intrinsic worth of a stock, juxtaposed against its market price and growth trajectory, dictates its future trajectory.

By juxtaposing a company’s current valuation multiples (be it price-to-earnings, price-to-sales, or price-to-cash flow) against its historical averages, investors can gauge if a stock is overvalued, undervalued, or rightfully priced. Further comparisons against industry peers shed light on the stock’s relative valuation position, offering insights into its market worthiness.

Perched at a D rating on the Zacks Style Scores platform, Meta Platforms appears to be trading at a premium relative to its peers. Delve deeper into the valuation metrics fueling this grade by clicking here.

The Final Verdict

The myriad of factors discussed here and the comprehensive data available on Zacks.com could be the guiding light for investors pondering over Meta Platforms. While the market noise might be deafening, the resounding Zacks Rank #1 for Meta Platforms signifies a potential victory lap ahead, outperforming the broader market in the short term.

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Read the original article on Zacks.com here.

Authored by Zacks Investment Reseach

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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