Meta Platforms, the former Facebook, has a lower price-to-earnings ratio than other Big Tech companies.
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‘ stock is as cheap now as it has ever been since the company’s 2012 initial public offering.
After a 32% fall in its shares, to $219, since Feb. 2, when its fourth-quarter earnings surprised investors,
(ticker: FB) now trades for 17 times projected 2022 earnings of $12.59 a share.
The only other time that Meta was close to being this inexpensive during its decade as a public company was in late 2018. Then it was a buying opportunity, as Barron’s said at the time. In the next 12 months, the stock rose more than 50%. Its average price-to-earnings ratio has been about 30 in the past five years, according to FactSet.
Shares of Meta, formerly Facebook, were down 0.3% on Monday.
In Meta’s fourth-quarter results and first-quarter outlook, there were worrisome signs that use of its apps was slowing and that its advertising sales faced hurdles. Barron’s argued that Meta now had “a quickly changing risk profile, one that looks uncomfortable even with a cheap stock.”
Meta bulls, nonetheless, argue that the stock, now trading with a valuation below that of many electric utilities, is a bargain. The company’s problems are fixable, they say, and revenue and profit growth should accelerate in the second half of 2022.
“There is deep skepticism about Facebook—more so ever,” says Mark Mahaney, an analyst at Evercore ISI. He has an Outperform rating and a $350 price target on the stock. “There is enormous upside in the stock. The risk/reward is very favorable.”
The FactSet consensus earnings estimate for 2022 has come down to $12.59 a share from $14.26 since the profit report on Feb….