Can Facebook Beat Consensus for FY 2019?

by Trefis Team
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Facebook (NASDAQ:FB) is slated to release its Q4 and full-year 2019 results on January 29, 2020. We believe that Facebook’s Revenues and earnings will beat consensus. We expect Facebook to report revenues of $70.6 billion (vs. consensus estimate of $70.5 billion), which would be 26.4% higher than the previous year. Earnings are likely to be around $7.04 (vs. consensus estimate of $6.41), lower than $7.57 reported in 2018, due to a much lower net income margin. We believe that stronger-than-expected revenues for FY 2019 would be able to overshadow negative earnings growth and will likely result in a positive movement in Facebook’s stock price once earnings are announced. In fact, our forecast indicates that Facebook’s Valuation is $236 per share, which is slightly higher than its current market price of roughly $218.

A] Revenue Expected To Beat Consensus

  • Total revenues has increased from $27.6 billion in 2016 to $55.8 billion in 2018.
  • Trefis estimates Facebook’s revenues to improve further by 26.4% to $70.6 billion in 2019 from $55.8 billion in 2018.
  • Revenue improvement is expected to be driven primarily by the Advertising Revenue from the company’s major products.

A separate interactive dashboard for Facebook provides an in-depth view of Facebook’s revenue trend and segment-wise revenue performance, along with forecast for 2019.

B] EPS To Be Higher Than Expected

  • Facebook’s 2019 earnings per share (EPS) is expected to be $7.04 per Trefis analysis, higher than the consensus estimate of $6.41 per share.
  • A high increase in Total expenses, slightly offset by increase in revenue, along with a lower share count, will drive the EPS decrease compared to 2018.
  • As we forecast Facebook’s Revenues to improve and Expenses to increase further in 2019 (26.4% vs 48.8%), this will result in a fall in Facebook’s Net Income Margin figure from 39.6% in 2018 to 28.9% in 2019.

C] Stock Price Estimate Higher than Market Price

  • A trailing P/E multiple of 33.5x looks appropriate for Facebook’s stock, which is lower than the current implied P/E multiple of 34.6x.
  • As per Trefis, Facebook’s 2019 revenue and Earnings will be higher than the market expectations. This forecast works out to a fair value of $236 for Facebook’s stock, which is slightly higher to its current market price of around $218.

Additionally, you can input your estimates for Facebook’s key metrics in our interactive dashboard for Facebook’s pre-earnings, and see how that will affect the company’s stock price.

 

 

See all Trefis Price Estimates and Download Trefis Data here

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