Facebook (NASDAQ: FB) is scheduled to report its fiscal Q2 2021 results on Wednesday, July 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 Q1 2021, the company saw growth in daily active users by 8% y-o-y, while the advertising business revenue grew by 46% y-o-y as the appeal of online advertising continued. We expect the same factors to drive the second-quarter FY2021 results as well.
Our forecast indicates that Facebook’s valuation is around $390 per share, which is 12% above the current market price of $349. Look at our interactive dashboard analysis on Facebook’s pre-earnings: What To Expect in Q2? for more details.
(1) Revenues expected to be ahead of consensus estimates in Q2
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Trefis estimates FB’s fiscal Q2 2021 revenues to be around $30.2 billion, 8.5% above the $27.8 billion consensus estimate. FB’s revenues saw growth due to the shift toward e-commerce in the second half of 2020 and the growth continued in first quarter of 2021. We expect the momentum generated to continue in the second quarter of FY2021. Overall, we expect revenue of around $116.8 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 Q2 2021 earnings per share (EPS) is expected to be $3.08 per Trefis analysis, above the consensus estimate of $3.02. The company is continuously working toward improving margins as witnessed in Q1 2021 where operating margin was recorded at 43% compared to 33% in same period of the previous year. Altogether, the company is likely to report an EPS of around $12.58 in FY2021.
(3) Stock price estimate 12% above the current market price
Going by our Facebook’s valuation, with an EPS estimate of around $12.58 and a P/E multiple of 31.0x in fiscal 2021, this translates into a price of $390, which is 12% above the current market price of around $349.
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
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