Facebook Stock Analysis

Facebook Aktienanalyse

Facebook Inc (WKN: A1JWVX ISIN: US30303M1027 Sector: Internet Service Provider Country: USA) Stock analysis 11/10/20.

All data and information on this site come from the premium tools of the fair value calculator.

Sector Analysis:

Facebook belongs to the internet service provider industry. The industry comparison with other stocks from the same industry shows in the industry analysis whether the company is cheap or expensive compared to the peer group:

Facebook

Price-to-book-ratio (P/B): 7,44

Price-to-earnings-ratio (P/E): 41,14

Peer Group

Price-to-book-ratio (P/B): 4,97

Price-to-earnings-ratio (P/E): 38,81


The industry comparison shows that Facebook is more expensive within the industry than other stocks of Internet service providers. Both the price / book ratio and the price / earnings ratio are higher than the industry average. It can be concluded that, according to the industry analysis, Facebook is more expensive than other stocks in this industry.

Fair Value Analysis:

By calculating the fair price (fair value) of the share, it can be determined whether the share is currently cheap or expensive. We use several different approaches to calculate fair value. Overview of the fair value analysis of the Facebook share:

Fair Value Calculator

2020: 380 USD

2021e: 489 USD

DCF Fair Value

1442 USD

Quality Fair Value

2020: 192 USD

2021e: 300 USD


The fair value of the Facebook share is around USD 407. This makes the stock seem undervalued and interesting to buy. (Arithmetic mean of geometric mean 434 USD and the median 380 USD = 407 USD)

Fair P/E ratio und quality:

The Fair Value Calculator Quality Check analyzes the soft quality factors of the Facebook share. This includes the analysis of the management, the product and the market environment. With the Total Value Score Ranking you can check the financial key figures for the Facebook share:

Fair P/E Ratio

30

Total Value score

7/10


If the stock is trading below a P/E ratio of 30, the stock looks cheap. With a Total Value Score of 7 out of 10 points, Facebook seems to have a good fundamental metrics position.

Momentum und Relative Strength:

The company's relative strength is one of the most important alpha factors in stock research. Only stocks with high relative strength and momentum can beat the market. The relative strength describes the factor with which the share performs in comparison to the overall market. (If the share performance corresponds to the market performance, the relative strength would be 1)

Relative Strength 12 Months

Facebook: 1.06

Industry: 0.62

Relative Strength 6 Months

Facebook: 1.31

Industry: 0.92


Facebook shows long-term strength compared to the overall market. Above all, the relative strength has increased in the last 6 months. This shows that there is a high level of momentum, which is very likely to result in higher prices in the future.

Growth & PEG Ratio

The growth figures and the price-earnings-growth-ratio indicate whether the high P/E ratio is justified due to strong growth. A comparison of the growth to the peer group rounds off the multiples comparison.

Growth Facebook

+42,78%

Growth Industry

+5,23%

PEG Facebook

0,96

PEG Industry

1,35


With a look at the enormous growth of Facebook, the initially seemingly high P/E ratio is put into perspective. With a PEG ratio, the stock even seems cheap. Facebook manages to grow faster in this industry than other public companies. The entire industry seems overrated, but Facebook can shine here in the rating due to its strong growth.

Fazit:

At first glance, the share of Facebook seems expensive, because the high P/E ratio is a deterrent. Here you have to consider the high P/E ratio in relation to the high growth figures of Facebook. It quickly becomes apparent that Facebook is actually still rated cheap. The fair value analysis also confirms that Facebook shares are around 50% undervalued.

The quality of the company is undisputedly excellent. Facebook has a monopoly position in the field of social networks and is the undisputed number 1. Since the users on Facebook are closely networked, it is almost impossible to copy Facebook's business model. This is also proven by Google's attempt to found a social network that has already been discontinued. So you can't access a competitor's product quickly. In addition, Facebook has a lot in the pipeline with various payment services and innovative products. The market in which Facebook moves is almost limitless. Short-term irritations such as the US presidential election or the accusation of misinformation could damage Facebook for a short time, but in our opinion these are only short-term problems to which there are definitely solutions.

The share of Facebook should therefore develop by a factor of 1.4 better than the overall market and reach the target price of 400.


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