Tech behemoth Meta Platforms, Inc. (META) will announce its fiscal 2024 first quarter results on Wednesday, April 24, 2024. The article delves into the reasons behind META's anticipation of market momentum as it gears up to announce its earnings.
The company has projected its first-quarter revenue to fall within $34.50-$37 billion, indicating a promising start to the fiscal year. META's strong performance in the previous quarter showcased robust double-digit EPS growth, a trend that analysts anticipate will continue into the first quarter.
On top of that, market analysts are optimistic about META's upcoming earnings report. They project an EPS of $4.95, marking a significant increase of 12.8% compared to the previous year. Furthermore, revenue is expected to see a healthy rise of 14.9% year-over-year, reaching an estimated $39.24 billion. Moreover, the company has an impressive earnings surprise history, surpassing its consensus EPS and revenue estimates in each of the trailing four quarters.
Looking at statistics, for December 2023, META’s Facebook saw a 6% year-over-year increase in daily active users (DAUs) on average, reaching 2.11 billion. Its monthly active users (MAUs) rose 3% year-over-year to 3.07 billion. Additionally, in the fiscal fourth quarter, ad impressions across Facebook's Family of Apps surged by 21% year-over-year, with the average price per ad rising by 2%. For the entire year, ad impressions increased by 28% year-over-year.
In terms of price performance, META’s stock has surged 126.3% over the past year and 36.1% year-to-date to close the last trading session at $481.73. It is currently trading above its 200-day moving average of $369.60, indicating an uptrend.
META's Near-Term Performance: What Might Be in the Cards?
New Waves in Virtual Reality Space
META's CEO, Mark Zuckerberg, recently made waves in the tech world when he took to Instagram to unveil "Meta Horizon OS." This software platform is specifically crafted to power META's Quest virtual reality headset lineup.
This move aims to simplify VR hardware development, offering access to META's dominant ecosystem and technologies like Passthrough and Scene Understanding.
First-Ever Dividend Payout
In a historic move, META's board of directors approved the company's inaugural cash dividend of $0.50 per share in the previous quarter, applicable to all outstanding common stock, including both Class A and Class B shares. This dividend was distributed on March 26, 2024.
Robust Financials
In the fiscal fourth quarter that ended December 31, 2023, META reported a 24.7% year-over-year in revenue, reaching $40.11 billion. Its income from operations improved 156% year-over-year to $16.38 billion.
Its net income and EPS attributable to class A and class B common stockholders increased 201.3% and 202.8% from the prior-year quarter to $14.02 billion and $5.33, respectively.
Share Repurchase Surge
In the final quarter of 2023, META repurchased $6.32 billion worth of its Class A common stock. This trend continued throughout the year, with a significant buyback totaling $20.03 billion by December 31, 2023. Notably, as of that date, META still had a sizable reserve of $30.93 billion specifically allocated for future share repurchases.
Additionally, META made headlines with its bold announcement of a $50 billion increase in its share repurchase authorization.
Positive Annual Outlook
META is expected to see revenue and EPS growth of 17.7% and 35% year-over-year, respectively, for the current fiscal year ending December 2024, reaching $158.81 billion and $20.07.
Steady Historical Expansion
Over the past three years, META’s revenue grew at a 16.2% CAGR. Its levered FCF and total assets increased at CAGRs of 26.6% and 13% during the same period, respectively. Furthermore, EBITDA and normalized net income rose at CAGRs of 15.8% and 15.4%, respectively, over the past three years.
Robust Profitability
META’s trailing-12-month net income margin of 28.98% is significantly higher than the industry average of 2.57%. Its trailing-12-month levered FCF margin of 24.07% is 190.8% higher than the industry average of 8.28%.
Also, its trailing-12-month ROCE, ROTC, and ROTA of 28.04%, 18.27%, and 17.03% compare to the respective industry averages of 2.86%, 3.29%, and 1.19%.
POWR Ratings Show Promise
META’s sound fundamentals are reflected in its POWR Ratings. The stock has an overall rating of B, which equates to Buy in our proprietary rating system. The POWR Ratings are calculated by taking into account 118 different factors, with each factor weighted to an optimal degree.
Our proprietary rating system also evaluates each stock based on eight distinct categories. META has an A grade for Sentiment, consistent with favorable analyst estimates. The stock also has an A grade for Quality, which is in sync with its higher-than-industry profit margins.
META is ranked #16 in the 53-stock Internet industry. The industry is rated B.
Click here to access META’s Growth, Value, Momentum, and Stability ratings.
Bottom Line
Amidst a rapidly evolving VR space, META’s contribution is notable, as indicated by the launch of Meta Horizon OS.
Moreover, last quarter marked META's first dividend payout, underscoring its commitment to returning value to investors. Besides, META's plan to use its resources for share buybacks aims to improve its capital structure and boost shareholder value, indicating a bright future ahead for the company's growth and success.
With its strategic initiatives, solid financial standing, and positive market outlook, META appears to be primed for market momentum. Hence, investing in META could be ideal for investors seeking growth opportunities in the market.
How Does Meta Platforms, Inc. (META) Stack Up Against Its Peers?
While META has an overall grade of B, equating to a Buy rating, you may also check out these other stocks within the Internet industry: Despegar.com, Corp. (DESP), Travelzoo (TZOO), and Yelp Inc. (YELP), with an A (Strong Buy) rating.
To explore more A and B-rated Internet stocks, click here.
What To Do Next?
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META shares rose $7.07 (+1.47%) in premarket trading Tuesday. Year-to-date, META has gained 38.09%, versus a 5.73% rise in the benchmark S&P 500 index during the same period.
About the Author: Kritika Sarmah
Her interest in risky instruments and passion for writing made Kritika an analyst and financial journalist. She earned her bachelor's degree in commerce and is currently pursuing the CFA program. With her fundamental approach, she aims to help investors identify untapped investment opportunities.
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