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Company name Facebook, Inc. Common Stock
Stock ticker FB
Live stock price [stckqut]FB[/stckqut]
P/E compared to competitors Fair

 

MANAGEMENT EXECUTION

Employee productivity Good
Sales growth Good
EPS growth Good
P/E growth Good
EBIT growth Good
Price growth Good
R&D growth Good
Income growth Good
Assets growth Good
Return on Assets growth Good
Income / Rev growth Good
TWCA Plus Good
Standard TWCA Good
Weighted ann. stock price increase Good

 

ANALYSIS

Confident Investor Rating Good
Target stock price (TWCA growth scenario) $356.61
Target stock price (averages with growth) $335.89
Target stock price (averages with no growth) $315.83
Target stock price (manual assumptions) $294.54

 

The following company description is from Reuters: https://finance.yahoo.com/quote/fb/profile?p=fb

Facebook, Inc. develops products that enable people to connect and share with friends and family through mobile devices, personal computers, virtual reality headsets, and in-home devices worldwide. The company’s products include Facebook that enables people to connect, share, discover, and communicate with each other on mobile devices and personal computers; Instagram, a community for sharing photos, videos, and private messages; Messenger, a messaging application for people to connect with friends, family, groups, and businesses across platforms and devices; and WhatsApp, a messaging application that is used by people and businesses to communicate in a private way. It also provides Oculus, a hardware, software, and developer ecosystem, which allows people to come together and connect with each other through its Oculus virtual reality products. Facebook, Inc. was founded in 2004 and is headquartered in Menlo Park, California.

 

Confident Investor comments: At this price and at this time, I think that a Confident Investor can confidently invest in Facebook, Inc. Common Stock as long as the indicators that I describe in my book The Confident Investor are favorable.

If you would like to understand how to evaluate companies like I do on this site, please read my book, The Confident Investor. You can review the best companies that I have found (and I probably invest my own money in most of these companies) in my Watch List.

How was this analysis of Facebook, Inc. Common Stock calculated?

For owners of my book, “The Confident Investor” I offer the following analysis (you must be logged in to this site as a book owner in order to see the following analysis). If you have registered and cannot see the balance of this article, make sure you are logged in and refresh your browser.
[s2If current_user_can(access_s2member_level1)]

In order to assist you in using the techniques of this book, the values that I used when calculating the Manual pricing above were:

  • Stock price at the time of the calculation: $230.75
  • Growth: 0.1879
  • Current EPS (TTM): $6.745
  • P/E: 29.7321716322261
  • Future EPS Calc: $15.95
  • Future Stock Price Calc: $474.35
  • Target stock price: $294.54

[/s2If]
I hope that this makes you a Confident Investor.

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In a recent Wall Street Journal article, Goldman Sachs compared the top 5 companies in 2000 to the top 5 companies today. In that comparison, Goldman concludes that the market is not repeating the problems of 2000 that caused the stock bubble in today’s market.

The top 5 companies in the S&P 500 today are:

  1. Facebook Inc.  [stckqut]FB[/stckqut],
  2. Apple Inc.  [stckqut]AAPL[/stckqut],
  3. Amazon.com Inc.  [stckqut]AMZN[/stckqut],
  4. Microsoft Corp.  [stckqut]MSFT[/stckqut],
  5. Alphabet Inc.  [stckqut]GOOGL[/stckqut].

and of 2000 were:

  1. Microsoft,
  2. Cisco Systems Inc.  [stckqut]CSCO[/stckqut],
  3. General Electric Co.  [stckqut]GE[/stckqut],
  4. Intel Corp.  [stckqut]INTC[/stckqut],
  5. Exxon Mobil Corp.  [stckqut]XOM[/stckqut].

The five companies in 2000 traded at 47 times expected earnings, according to Goldman. Today’s five biggest companies trade at 30 times expected earnings—making them by no means a bargain, but still less expensive than the stocks that dominated the stock run in the early 2000s.

The tech giants powering the S&P 500 today also reinvest far more of their profits into their businesses than their predecessors did. The five companies funnel about 48% of their cash flow from operations into capital expenditure and research and development spending, according to Goldman, well above the S&P 500’s 21% average and the 26% average for the five biggest companies in March 2000.

According to Goldman, “Lower growth expectations, lower valuations and a greater reinvestment ratio suggest the current concentration may be more sustainable than it proved to be in 2000.”

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Company name Facebook, Inc. Common Stock
Stock ticker FB
Live stock price [stckqut]FB[/stckqut]
P/E compared to competitors Good

MANAGEMENT EXECUTION

Employee productivity Good
Sales growth Good
EPS growth Good
P/E growth Poor
EBIT growth Good

ANALYSIS

Confident Investor Rating Good
Target stock price (TWCA growth scenario) $281.38
Target stock price (averages with growth) $267.3
Target stock price (averages with no growth) $267.3
Target stock price (manual assumptions) $280.75

 

The following company description is from Reuters: https://www.reuters.com/finance/stocks/company-profile/fb

Facebook, Inc., incorporated on July 29, 2004, is focused on building products that enable people to connect and share through mobile devices, personal computers and other surfaces. The Company also enables people to discover and learn about what is going on in the world around them, enables people to share their opinions, ideas, photos and videos, and other activities with audiences ranging from their friends to the public, and stay connected by accessing its products. The Company’s products include Facebook, Instagram, Messenger, WhatsApp and Oculus. The Company also engages in selling advertising placements to marketers. Its advertisements let marketers reach people based on a range of factors, including age, gender, location, interests and behaviors. Marketers purchase advertisements that can appear in multiple places, including on Facebook, Instagram, and third-party applications and Websites.

Confident Investor comments: At this price and at this time, I think that a Confident Investor can confidently invest in Facebook, Inc. Common Stock as long as the indicators that I describe in my book The Confident Investor are favorable.

If you would like to understand how to evaluate companies like I do on this site, please read my book, The Confident Investor. You can review the best companies that I have found (and I probably invest my own money in most of these companies) in my Watch List.

How was this analysis of Facebook, Inc. Common Stock calculated?

For owners of my book, “The Confident Investor” I offer the following analysis (you must be logged in to this site as a book owner in order to see the following analysis). If you have registered and cannot see the balance of this article, make sure you are logged in and refresh your browser.
[s2If current_user_can(access_s2member_level1)]

In order to assist you in using the techniques of this book, the values that I used when calculating the Manual pricing above were:

  • Stock price at the time of the calculation: $182.19
  • Growth: 0.2
  • Current EPS (TTM): $6.73
  • P/E: 27
  • Future EPS Calc: $16.74
  • Future Stock Price Calc: $452.15
  • Target stock price: $280.75

[/s2If]
I hope that this makes you a Confident Investor.

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My efforts to find great companies is primarily based on analyzing the fundamentals of each company. It is almost impossible for the average investor to directly understand the effectiveness of a company’s IT spending. Luckily, we don’t have to because that effectiveness should result in growing revenue and growing profitability (which we can directly monitor).

As you read the annual reports of companies though, an important consideration is the CEO’s comments about how IT investment is helping the company. If you fail to see this line of commentary, it should be a red flag for you. Conversely, a strong emphasis by the executives on IT spend that offers competitive advantage should at least be a signal to you to continue watching the company’s performance.

From the cited WSJ article (article may be behind a paywall):

The secret of success for Amazon, Google and Microsoft is how much they invest in their own technology.

New data suggests that the secret of the success of the Amazons, Googles and Facebook s of the world—not to mention the Walmart s, CVSes and UPSes before them—is how much they invest in their own technology. IT spending that goes into hiring developers and creating software owned and used exclusively by a firm is the key competitive advantage. It’s different from our standard understanding of R&D in that this software is used solely by the company, and isn’t part of products developed for its customers.

Source: Why Do the Biggest Companies Keep Getting Bigger? It’s How They Spend on Tech

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Company name Facebook Inc
Stock ticker FB
Live stock price [stckqut]FB[/stckqut]
P/E compared to competitors Good

MANAGEMENT EXECUTION

Employee productivity Good
Sales growth Good
EPS growth Good
P/E growth Poor
EBIT growth Good

ANALYSIS

Confident Investor Rating Good
Target stock price (TWCA growth scenario) $282.09
Target stock price (averages with growth) $415.29
Target stock price (averages with no growth) $282.09
Target stock price (manual assumptions) $284.09

 

The following company description is from Reuters: https://www.reuters.com/finance/stocks/company-profile/fb

Facebook, Inc., incorporated on July 29, 2004, is focused on building products that enable people to connect and share through mobile devices, personal computers, and other surfaces. The Company also enables people to discover and learn about what is going on in the world around them, enables people to share their opinions, ideas, photos and videos, and other activities with audiences ranging from their friends to the public, and stay connected by accessing its products. The Company’s products include Facebook, Instagram, Messenger, WhatsApp and Oculus. The Company also engages in selling advertising placements to marketers. Its advertisements let marketers reach people based on a range of factors, including age, gender, location, interests, and behaviors. Marketers purchase advertisements that can appear in multiple places, including on Facebook, Instagram, and third-party applications and Websites.

Facebook enables people to connect, share, discover and communicate with each other on mobile devices and personal computers. There are various ways to engage with people on Facebook, including News Feed, which displays an algorithmically-ranked series of stories and advertisements individualized for each person. Instagram enables people to take photos or videos, customize them with filter effects, and share them with friends and followers in a photo feed or send them directly to friends. Messenger allows communicating with people and businesses alike across a range of platforms and devices. WhatsApp Messenger is a messaging application that is used by people around the world and is available on a range of mobile platforms. Its Oculus virtual reality technology and content platform offers products that allow people to enter an interactive environment to play games, consume content and connect with others.

 

Confident Investor comments: At this price and at this time, I think that a Confident Investor can confidently invest in Facebook Inc as long as the indicators that I describe in my book The Confident Investor are favorable.

If you would like to understand how to evaluate companies like I do on this site, please read my book, The Confident Investor. You can review the best companies that I have found (and I probably invest my own money in most of these companies) in my Watch List.

How was this analysis of Facebook Inc calculated?

For owners of my book, “The Confident Investor” I offer the following analysis (you must be logged in to this site as a book owner in order to see the following analysis). If you have registered and cannot see the balance of this article, make sure you are logged in and refresh your browser.
[s2If current_user_can(access_s2member_level1)]

In order to assist you in using the techniques of this book, the values that I used when calculating the Manual pricing above were:

  • Stock price at the time of the calculation: $182.68
  • Growth: 0.2
  • Current EPS (TTM): $6.81
  • P/E: 27
  • Future EPS Calc: $16.94
  • Future Stock Price Calc: $457.52
  • Target stock price: $284.08

[/s2If]
I hope that this makes you a Confident Investor.