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Facebook (FB) Outpaces Stock Market Gains: What You Should Know

Zacks Equity Research
·3 min read

Facebook (FB) closed at $268.11 in the latest trading session, marking a +0.38% move from the prior day. This move outpaced the S&P 500's daily gain of 0.08%. At the same time, the Dow added 0.38%, and the tech-heavy Nasdaq lost 0.29%.

Coming into today, shares of the social media company had lost 3.55% in the past month. In that same time, the Computer and Technology sector gained 7.44%, while the S&P 500 gained 3.8%.

Wall Street will be looking for positivity from FB as it approaches its next earnings report date. The company is expected to report EPS of $3.20, up 25% from the prior-year quarter. Our most recent consensus estimate is calling for quarterly revenue of $26.23 billion, up 24.43% from the year-ago period.

For the full year, our Zacks Consensus Estimates are projecting earnings of $9.39 per share and revenue of $84.19 billion, which would represent changes of +46.03% and +19.09%, respectively, from the prior year.

Investors should also note any recent changes to analyst estimates for FB. These revisions help to show the ever-changing nature of near-term business trends. As a result, we can interpret positive estimate revisions as a good sign for the company's business outlook.

Research indicates that these estimate revisions are directly correlated with near-term share price momentum. To benefit from this, we have developed the Zacks Rank, a proprietary model which takes these estimate changes into account and provides an actionable rating system.

Ranging from #1 (Strong Buy) to #5 (Strong Sell), the Zacks Rank system has a proven, outside-audited track record of outperformance, with #1 stocks returning an average of +25% annually since 1988. Over the past month, the Zacks Consensus EPS estimate remained stagnant. FB is currently a Zacks Rank #3 (Hold).

In terms of valuation, FB is currently trading at a Forward P/E ratio of 28.45. This valuation marks a discount compared to its industry's average Forward P/E of 30.17.

It is also worth noting that FB currently has a PEG ratio of 1.54. This metric is used similarly to the famous P/E ratio, but the PEG ratio also takes into account the stock's expected earnings growth rate. The Internet - Services was holding an average PEG ratio of 1.96 at yesterday's closing price.

The Internet - Services industry is part of the Computer and Technology sector. This industry currently has a Zacks Industry Rank of 170, which puts it in the bottom 34% of all 250+ industries.

The Zacks Industry Rank gauges the strength of our individual industry groups by measuring the average Zacks Rank of the individual stocks within the groups. Our research shows that the top 50% rated industries outperform the bottom half by a factor of 2 to 1.

You can find more information on all of these metrics, and much more, on Zacks.com.

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Facebook, Inc. (FB) : Free Stock Analysis Report
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Zacks Investment Research