Meta Platforms Poised for Earnings Success: What to Expect
The market anticipates that Meta Platforms (META) will report an increase in earnings year-over-year due to rising revenues when it shares its results for the quarter ending September 2024. This widely held view is crucial for assessing the company’s financial health. However, a significant factor that could influence the stock price is how these reported numbers stack up against expectations.
Should these figures exceed forecasts in the upcoming earnings report, set for release on October 30, the stock may climb higher. Conversely, if Meta falls short, it could see a decline.
While immediate stock price changes and future earnings forecasts largely rely on management’s insights during the earnings call, it’s also valuable to evaluate the likelihood of a positive surprise in earnings per share (EPS).
Current Consensus Estimates
Meta Platforms is expected to report quarterly earnings of $5.17 per share, marking a 17.8% increase from the same period last year. Anticipated revenues are projected at $40.16 billion, reflecting a 17.6% rise from the previous year.
Trend of Estimate Revisions
Over the past 30 days, the consensus EPS estimate has been adjusted upward by 0.81%. This change indicates that analysts have reevaluated their predictions during this period. However, it is important to note that individual revisions by analysts may not always align with the overall trend.
A Look at Earnings Whisper
Revisions made just before earnings releases can provide insight into the company’s performance during the reported period. The Zacks Earnings ESP (Expected Surprise Prediction) system plays a key role in this analysis.
This model compares the Most Accurate Estimate with the Zacks Consensus Estimate for the quarter. The Most Accurate Estimate reflects the latest insights from analysts, which may differ from earlier consensus figures. A positive or negative Earnings ESP reading helps forecast the divergence of actual earnings from the consensus estimate, but the model is more reliable for positive ESP readings.
A positive Earnings ESP, especially when paired with a Zacks Rank of #1 (Strong Buy), #2 (Buy), or #3 (Hold), indicates a high likelihood of surpassing earnings expectations. Historical data shows that this combination leads to a positive surprise nearly 70% of the time. Conversely, a negative Earnings ESP does not necessarily mean an earnings miss; predicting positive surprises in such cases is challenging.
Meta Platforms’ Recent Performance Overview
Currently, the Most Accurate Estimate for Meta Platforms is above the Zacks Consensus Estimate, indicating a recent shift toward optimism in earnings outlooks. This results in an Earnings ESP of +2.83%.
Additionally, Meta holds a Zacks Rank of #2, signaling a strong potential to exceed EPS expectations.
Understanding Past Earnings Surprises
Evaluating a company’s ability to meet past estimates can help assess future performance. In the most recent quarter, analysts expected Meta to earn $4.70 per share, but actual earnings were reported at $5.16—leading to a surprise of +9.79%.
Historically, Meta has bested consensus EPS estimates in each of the last four quarters.
Final Thoughts
While an earnings beat or miss can influence stock movement, other factors also play a role. Some stocks decline even after reporting solid earnings due to broader market conditions, while others may rise despite missing earnings expectations. Investing in stocks expected to exceed earnings forecasts can improve the chances of positive returns. Therefore, reviewing a company’s Earnings ESP and Zacks Rank ahead of the quarterly report is advisable. Currently, Meta Platforms shows strong potential as a candidate for an earnings beat; however, investors should consider other aspects before making decisions related to this stock.
Industry Highlights: PayPal’s Upcoming Results
In the Zacks Internet – Software sector, PayPal (PYPL) is set to report earnings of $1.08 per share for the same quarter, representing a year-over-year decrease of 16.9%. Expected revenue stands at $7.86 billion, up 5.9% from last year.
The consensus EPS estimate for PayPal has also risen by 1.2% over the past month. With a higher Most Accurate Estimate, this results in an Earnings ESP of 1.92%. Coupled with a Zacks Rank of #3 (Hold), this suggests PayPal is likely to exceed EPS expectations as well. PayPal has consistently outperformed consensus estimates over the last four quarters.
Stay updated with Zacks Earnings Calendar for timely information on upcoming earnings announcements.
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The views and opinions expressed herein are those of the author and do not necessarily reflect those of Nasdaq, Inc.
