Can Facebook Beat Consensus for FY 2019?

January 24th, 2020 by Trefis Team
FB: Facebook logo
FB
Facebook

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.

Relevant Articles
  1. Will United Airlines Stock Continue To See Higher Levels After A 20% Rise Post Upbeat Q1?
  2. Up 8% This Year, Why Is Costco Stock Outperforming?
  3. Down 7% In A Day, Where Is Travelers Stock Headed?
  4. What’s Next For Johnson & Johnson Stock After Beating Q1 Earnings?
  5. Should You Pick UnitedHealth Stock At $480 After A Q1 Beat?
  6. American Express Stock Is Up 17% YTD, What To Expect From Q1?

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

What’s behind Trefis? See How It’s Powering New Collaboration and What-Ifs For CFOs and Finance Teams | Product, R&D, and Marketing Teams