What To Expect From Facebook’s Quarter?

Facebook’s stock (NASDAQ: FB) is scheduled to report its fiscal Q3 2021 results on Monday, October 25. 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 first half of the year, the company saw growth as daily active users continued to increase and the advertising business revenue grew as the appeal of online advertising continued. We expect the same factors to drive the third-quarter FY2021 results as well.

Our forecast indicates that Facebook’s valuation is around $402 per share, which is 18% above the current market price of $341. Look at our interactive dashboard analysis on Facebook’s pre-earnings: What To Expect in Q3? for more details. 

(1) Revenues expected to be ahead of consensus estimates in Q2

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Facebook’s revenues for full-year 2020 were $86 billion – up 21% y-o-y, with Advertising segment primarily driving the growth as a focus on online advertising continues to be a tailwind for the company. Trefis estimates FB’s fiscal Q3 2021 revenues to be around $30.76 billion, above the $29.57 billion consensus estimate. We expect the advertising segment to continue to drive the results. Our dashboard on Facebook’s revenues offers more details on the company’s operating segments along with our forecast for the next two years.

(2) EPS likely to beat the consensus estimates

FB’s Q3 2021 earnings per share (EPS) is expected to be $3.47 per Trefis analysis, above the consensus estimate of $3.19. The company is continuously working toward improving margins as witnessed in the first half of 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 $13.94 in FY2021.

(3) Stock price estimate 18% above the current market price

Going by our Facebook’s valuation, an EPS estimate of $16.01 in FY 2022 and a P/E multiple of 25.1x in fiscal 2021, translates into a price of $402, which is 18% above the current market price of around $341.

Further, our analysis of Google vs. Facebook finds Facebook to be a better investment option. Also, Facebook’s Peer Comparison summarizes how the company fares against peers on metrics that matter.

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