Want To Invest In Facebook Inc (NASDAQ:FB)? Here’s How It Performed Lately
Assessing Facebook Inc’s (NASDAQ:FB) past track record of performance is a useful exercise for investors. It allows us to understand whether the company has met or exceed expectations, which is a great indicator for future performance. Below, I assess FB’s latest performance announced on 31 December 2017 and evaluate these figures to its historical trend and industry movements. View our latest analysis for Facebook
How Well Did FB Perform?
I look at the ‘latest twelve-month’ data, which annualizes the most recent half-year data, or in some cases, the latest annual report is already the most recent financial year data. This technique enables me to examine many different companies on a similar basis, using the most relevant data points. For Facebook, its most recent bottom-line (trailing twelve month) is US$15.92B, which, in comparison to last year’s level, has risen by a substantial 56.26%. Given that these values may be relatively nearsighted, I’ve created an annualized five-year figure for Facebook’s net income, which stands at US$4.50B This means on average, Facebook has been able to steadily grow its bottom line over the last couple of years as well.
What’s enabled this growth? Let’s take a look at whether it is only due to industry tailwinds, or if Facebook has seen some company-specific growth. In the past couple of years, Facebook grew its bottom line faster than revenue by efficiently controlling its costs. This resulted in a margin expansion and profitability over time. Looking at growth from a sector-level, the US internet industry has been growing its average earnings by double-digit 15.14% in the past year, and 16.35% over the past five. This suggests that whatever tailwind the industry is enjoying, Facebook is capable of leveraging this to its advantage.
What does this mean?
Though Facebook’s past data is helpful, it is only one aspect of my investment thesis. While Facebook has a good historical track record with positive growth and profitability, there’s no certainty that this will extrapolate into the future. I suggest you continue to research Facebook to get a more holistic view of the stock by looking at:
1. Future Outlook: What are well-informed industry analysts predicting for FB’s future growth? Take a look at our free research report of analyst consensus for FB’s outlook.
2. Financial Health: Is FB’s operations financially sustainable? Balance sheets can be hard to analyze, which is why we’ve done it for you. Check out our financial health checks here.
3. Other High-Performing Stocks: Are there other stocks that provide better prospects with proven track records? Explore our free list of these great stocks here.
NB: Figures in this article are calculated using data from the trailing twelve months from 31 December 2017. This may not be consistent with full year annual report figures.
To help readers see pass the short term volatility of the financial market, we aim to bring you a long-term focused research analysis purely driven by fundamental data. Note that our analysis does not factor in the latest price sensitive company announcements.
The author is an independent contributor and at the time of publication had no position in the stocks mentioned.
