| Stock (Symbol) | Stock Price | |
Facebook (FB) |
$74 |
|
| Data is as of | Expected to Report | Sector |
July 30, 2014 |
Oct 28 – Nov 3 |
Technology |
| Sharek’s Take | ||
 Facebook continues to kill it, the statistics are startling. Profits jumped 121% last quarter on a 61% increase in revenue. My favorites: Revenue by user was $2.24 last qtr (yes, that’s you) and expenses as a cost of revenue was 16% down a whopping 10% from 26% in the year-ago qtr. A year ago we thought FB would make 23 cents in 2014 Q2, it instead came out with 42 cents. Also, FB’s undervalued by 32%. The $74 stock is worth $97. But the BIG news is Facebook is the best place to invest in advertising. Its earnings season right now, so I don’t have time to look up the stats, but I can tell you nothing is more effective in advertising your product or service than ads on Facebook. Twitter doesn’t even come close. AND Facebook had a meaningful acceleration in ad revenue last quarter, especially in mobile. |
||
| One-Year Chart | ||
 I like that this stock hasn’t gone on a swift run higher. It’s done well for the year, and has shook out weak investors when correcting, then returned to new highs. Profits are growing at a triple-digit rate and the P/E is a reasonable 46. The Est. LTG is one of the highest of any stock I’m aware of, and is up 2% since last qtr. |
||
| Earnings Table | ||
 I want to use this space predict how much FB will make. 1st let’s go over past/present Q2 & Q3 profits:2012 Q2 $0.12 Q3 $0.12 2013 Q2 $0.19 Q3 $0.25 2014 Q2 $0.42 Q3 $0.39e Te last number, $0.39, is NxtQtrEst. You don’t need to be a mathematician to see this is probably low. I think FB beats the $0.39 est. & makes $0.45 NxtQtr. If we look to the 2QtrOutEst I think FB beats the $0.47 est and makes $0.60. That’s a total of $1.81 in profits for 2014.If FB makes $1.81 in 2014, a good guess is it could make $2.50 in 2015. If we take today’s P/E of 46 x $2.50 we get a $115 stock vs. $74 today = 55% upside. Also note 2015’s Annual Profit Est. has jumped from $1.47 to $2.02 in the last 4qtrs. |
||
| Fair Value | ||
 This Fair Value chart doesn’t take into account assumptions, it just puts a fair P/E on current estimates. I think FB is worth 60 times earnings, and that gives us a current Fair Value of $97 and a 2015 Fair Value of $121. The $121 is close to the $115 one I guessed at in the above example. |
||
| Ten-Year Chart | ||
 FB stock has been on fire since it figured out it pays to put ads in the newsfeed. Note at the bottom that profit growth is accelerating this year. This is the best business in the workld. |
||
| Power Ranking | Bottom Line | |
Growth Portfolio
2 of 26 |
Facebook is the best business in the world — both for advertisers and investors. Ad growth had a meaningful acceleration last quarter. Profits are growing at a triple-digit rate and the best case is FB makes $2.50 next year, gets a 60 P/E, and is $150 next year – double what it is today. |
|
Aggressive Growth Portfolio
2 of 12 |
||
