In today's fast-paced and highly competitive business world, it is crucial for investors and industry followers to conduct comprehensive company evaluations. In this article, we will delve into an extensive industry comparison, evaluating Meta Platforms META in relation to its major competitors in the Interactive Media & Services industry. By closely examining key financial metrics, market standing, and growth prospects, our objective is to provide valuable insights and highlight company's performance in the industry.
Meta Platforms Background
Meta is the largest social media company in the world, boasting close to 4 billion monthly active users worldwide. The firm's "Family of Apps," its core business, consists of Facebook, Instagram, Messenger, and WhatsApp. End users can leverage these applications for a variety of different purposes, from keeping in touch with friends to following celebrities and running digital businesses for free. Meta packages customer data, gleaned from its application ecosystem and sells ads to digital advertisers. While the firm has been investing heavily in its Reality Labs business, it remains a very small part of Meta's overall sales.
| Company | P/E | P/B | P/S | ROE | EBITDA (in billions) | Gross Profit (in billions) | Revenue Growth |
|---|---|---|---|---|---|---|---|
| Meta Platforms Inc | 21.15 | 7 | 8.02 | 12.0% | $28.26 | $39.55 | 20.63% |
| Alphabet Inc | 18.11 | 5.46 | 5.18 | 8.3% | $36.5 | $55.86 | 11.77% |
| Baidu Inc | 9.09 | 0.78 | 1.57 | 1.76% | $7.22 | $16.11 | -2.37% |
| Pinterest Inc | 9.66 | 3.68 | 4.94 | 48.33% | $0.27 | $0.96 | 17.62% |
| Kanzhun Ltd | 32.21 | 3.29 | 6.93 | 3.04% | $0.33 | $1.6 | -4.6% |
| CarGurus Inc | 131.45 | 5.07 | 3.12 | 8.95% | $0.06 | $0.2 | 2.43% |
| ZoomInfo Technologies Inc | 94 | 1.50 | 2.24 | 0.87% | $0.02 | $0.26 | -2.31% |
| Yelp Inc | 18.97 | 3.12 | 1.78 | 5.69% | $0.07 | $0.33 | 5.72% |
| Weibo Corp | 7.41 | 0.60 | 1.30 | 0.25% | $0.14 | $0.37 | -1.65% |
| Tripadvisor Inc | 292 | 1.74 | 0.92 | 0.11% | $0.03 | $0.41 | 5.38% |
| Ziff Davis Inc | 23.58 | 0.79 | 1.06 | 3.6% | $0.14 | $0.37 | 5.88% |
| Hello Group Inc | 7.65 | 0.61 | 0.75 | 1.66% | $0.56 | $1.05 | -1.43% |
| Average | 58.56 | 2.42 | 2.71 | 7.51% | $4.12 | $7.05 | 3.31% |
When conducting a detailed analysis of Meta Platforms, the following trends become clear:
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A Price to Earnings ratio of 21.15 significantly below the industry average by 0.36x suggests undervaluation. This can make the stock appealing for those seeking growth.
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It could be trading at a premium in relation to its book value, as indicated by its Price to Book ratio of 7.0 which exceeds the industry average by 2.89x.
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The Price to Sales ratio of 8.02, which is 2.96x the industry average, suggests the stock could potentially be overvalued in relation to its sales performance compared to its peers.
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The company has a higher Return on Equity (ROE) of 12.0%, which is 4.49% above the industry average. This suggests efficient use of equity to generate profits and demonstrates profitability and growth potential.
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The Earnings Before Interest, Taxes, Depreciation, and Amortization (EBITDA) of $28.26 Billion is 6.86x above the industry average, highlighting stronger profitability and robust cash flow generation.
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With higher gross profit of $39.55 Billion, which indicates 5.61x above the industry average, the company demonstrates stronger profitability and higher earnings from its core operations.
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The company's revenue growth of 20.63% is notably higher compared to the industry average of 3.31%, showcasing exceptional sales performance and strong demand for its products or services.
Debt To Equity Ratio
The debt-to-equity (D/E) ratio indicates the proportion of debt and equity used by a company to finance its assets and operations.
Considering the debt-to-equity ratio in industry comparisons allows for a concise evaluation of a company's financial health and risk profile, aiding in informed decision-making.
When examining Meta Platforms in comparison to its top 4 peers with respect to the Debt-to-Equity ratio, the following information becomes apparent:
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Among its top 4 peers, Meta Platforms has a stronger financial position with a lower debt-to-equity ratio of 0.27.
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This indicates that the company relies less on debt financing and maintains a more favorable balance between debt and equity, which can be viewed positively by investors.
Key Takeaways
For Meta Platforms, the PE ratio is low compared to peers, indicating potential undervaluation. The high PB and PS ratios suggest the market values the company's assets and sales highly. In terms of ROE, EBITDA, gross profit, and revenue growth, Meta Platforms outperforms its industry peers, reflecting strong financial performance and growth potential.
This article was generated by Benzinga's automated content engine and reviewed by an editor.
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