Facebook’s Stock To Grow As Earnings Expected To Beat Market Estimates?

by Trefis Team
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Facebook (NASDAQ: FB) is scheduled to report its fiscal Q1 2021 results on Wednesday, April 28. We expect FB to beat the consensus estimates for revenues and earnings. The company has reported better than expected revenue and earnings figures in each of the last four quarters. In the past year, the company saw growth in daily active users as people turned to social media during the lockdown. Due to the pandemic, people turned to e-commerce which provided a tailwind to the company’s advertising business in the second half of 2020. We expect the same to drive the first-quarter FY2021 results as well.

Our forecast indicates that Facebook’s valuation is around $360 per share, which is 20% above the current market price of around $301. Look at our interactive dashboard analysis on Facebook’s pre-earnings: What To Expect in Q1? for more details. 

(1) Revenues expected to be ahead of consensus estimates in Q1

Trefis estimates FB’s fiscal Q1 2021 revenues to be around $25.6 billion, 8% above the $23.5 billion consensus estimate. FB’s revenues of $86 billion for the full year 2020 were above its 2019 figure, as the shift toward e-commerce became a tailwind for the advertising segment in the second half of 2020. We expect the momentum generated over the last couple of quarters to continue in the first quarter of FY2021. Overall, we expect revenue of around $105.4 billion in FY2021. Our dashboard on Facebook’s revenues offers more details on the company’s segments.

(2) EPS likely to beat the consensus estimates

FB’s Q1 2021 earnings per share (EPS) is expected to be $3.43 per Trefis analysis, above the consensus estimate of $2.36. The company’s net income margin rose in 2020. This increased the EPS figure from $6.33 in 2019 to $10.22 in 2020. The removal of lockdowns and steady growth in the rate of vaccination has contributed to a revival in demand across sectors. Altogether, the company is likely to report an EPS of around $11.53 in FY2021.

(3) Stock price estimate 20% above the current market price

Going by our Facebook’s valuation, with an EPS estimate of around $11.53 and a P/E multiple of 31.3x in fiscal 2021, this translates into a price of $360, which is 20% above the current market price of around $301.

Note: P/E Multiples are based on Share Price at the end of the year and reported (or expected) Adjusted Earnings for the full year

Looking for reasonably valued software stocks with big room to grow? Check out our theme on Mid-Cap SaaS Stocks.

See all Trefis Price Estimates and Download Trefis Data here

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