Meta Platforms Inc (META)

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Bull of the Day: Facebook (FB)
By: Zacks Investment Research | February 17, 2021

Facebook, Inc. (FB) is still growing its revenue by the double digits even with its recent controversies. This Zacks Rank #1 (Strong Buy) is also the cheapest of the FAANG stocks.

Is it a value?

Facebook is a social media company that connects families, friends and businesses globally through its apps and technologies including Facebook, Instagram and WhatsApp.

Big Beat in the Fourth Quarter of 2020

On Jan 27, Facebook reported its fourth quarter 2020 results and posted its third big earnings surprise in a row.

Earnings were $3.88 versus the consensus of $3.24.

Revenue was up 33% with advertising revenue jumping 31%.

Monthly active users rose 12% year-over-year to 2.8 billion.

Analysts are Bullish on 2021 and 2022

Despite the ups and downs the company had in 2020 with its public relations surrounding the election and content, the analysts were still bullish on the overall outlook for the company.

For 2021, 17 analysts revised their earnings estimates higher for 2021, pushing up the Zacks Consensus to $11.28 from $10.38 in the last 30 days.

That's earnings growth of 11.8% as Facebook made $10.09 in 2020.

Sales are also expected to grow 26.1% to $108.4 billion in 2021.

Looking ahead to 2022, the analysts are equally as bullish with 12 estimates being revised higher since the fourth quarter earnings reports.

The 2022 Zacks Consensus Estimate has jumped to $13.57 from $12.98 in the last month.

That's further earnings growth of 20.2%.

Revenue is expected to rise double digits again in 2022, with sales growing 19.5% to $129.6 billion.

Shareholder Friendly

No, Facebook doesn't yet pay a dividend.

But it had a $34 billion share buyback program in 2020, with just $8.6 billion left at the end of 2020.

The board voted on another $25 billion share buyback program for 2021.

It had cash and cash equivalent of $61.95 billion as of Dec 31, 2020.

Is Facebook a Value Stock?

Facebook's stock has been "out-of-favor" among investors for the past 3 months. Shares have fallen 2.3% during that time while the S&P 500 has rallied over 9%.
It has a forward P/E of just 24 and



It has a forward P/E of just 24 and a PEG ratio of only 1.3.

A PEG ratio under 1.0 usually means value.

But Facebook is now the cheapest of the FAANG stocks on a P/E basis.

Apple AAPL has a forward P/E of 30.2.

Alphabet (GOOGL) is at 30.4x.

Netflix (NFLX) has a forward P/E of 57.6 and Amazon (AMZN) remains the most expensive of them all, at 66.3x.

For investors looking for a cheap growth stock, Facebook is one to keep on the short list.

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