| Stock (Symbol) | Stock Price | |
Facebook (FB) |
$75 |
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| Data is as of | Expected to Report | Sector |
February 4, 2015 |
Apr 21 – Apr 27 |
Technology |
| Sharek’s Take | ||
 Facebook’s expenses soared last qtr, as expected, and that’s what’s keeping the stock from going higher. FB’s expenses rose 87% last qtr on a 49% rise in sales as the company invests in R&D to try to stay ahead. FB is getting something out of this investment (unlike Google) as new features are keeping the platform cutting edge. Management thinks expenses will rise 70% in 2015 as profit growth is expected to be just 10% in for the year. I think the stock doesn’t have the momentum (or earnings growth) to go higher this year, but at 39 times earnings the worlds top social networking site is cheap compared to many of its peers. Overall this is a fantastic stock for the long-term as I feel profit growth will get back to normal in 2016, but its not doing anything now. |
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| One-Year Chart | ||
 Here’s FB flatlining. Such a tight range the stock’s in, that’s good because I think it means it’s is charging up for another run higher. Note Estimates show just 18% and 10% profit growth the next two qtrs. FB usually beats to so the end result will probably be better, but nothing like the +70% growth its been having. Nice Est LTG of 32%, which is very high. |
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| Earnings Table | ||
 Facebook’s profit growth was 74% last qtr on a 49% rise in sales. FB beat the street by 6 cents and has beaten in each of the past 4 qtrs. Annual Profit Estimates increased a bit, but haven’t been moving up much lately. That’s a reason this isn’t a top-tier growth stock right now. 10% profit growth is expected in 2015. Qtrly profit growth looks poor. |
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| Fair Value | ||
 The real value in FB is holding it through 2016, as the stock is currently just 14% under its 2015 Fair Value. Remember FB is cheap compared to many Internet stocks, so the stock could go on a run higher without deserving to. |
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| Ten-Year Chart | ||
 Wow that 10% profit growth sticks out like a sore thumb.I sold a lot of shares of FB to lower the weighting in my client portfolios. |
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| Power Ranking | Bottom Line | |
Growth Portfolio
16 of 25 |
Facebook is about to experience slower profit growth and that’s holding back the shares for now, but the stock is still a solid holding for long-term accounts. I feel FB will continue to straight-line for a while, and make a move higher late in the year or in early 2016 — if it doesn’t lower estimates again (big if). |
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Aggressive Growth Portfolio
N/A |
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