Amidst today's fast-paced and highly competitive business environment, it is crucial for investors and industry enthusiasts to conduct comprehensive company evaluations. In this article, we will delve into an extensive industry comparison, evaluating Meta Platforms META in comparison to its major competitors within the Interactive Media & Services industry. By analyzing critical financial metrics, market position, and growth potential, our objective is to provide valuable insights for investors and offer a deeper understanding of 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 | 22.37 | 7.81 | 8.75 | 9.05% | $28.26 | $39.55 | -12.55% |
| Alphabet Inc | 18 | 5.67 | 5.50 | 10.3% | $46.31 | $53.87 | 12.04% |
| Baidu Inc | 9.70 | 0.83 | 1.68 | 1.76% | $7.22 | $16.11 | -2.37% |
| Pinterest Inc | 9.55 | 3.63 | 4.88 | 48.33% | $0.27 | $0.96 | 17.62% |
| Kanzhun Ltd | 32.38 | 3.34 | 6.96 | 3.05% | $0.38 | $1.51 | 15.4% |
| Autohome Inc | 14.80 | 0.97 | 3.41 | 1.25% | $0.23 | $1.35 | -6.7% |
| ZoomInfo Technologies Inc | 107.88 | 1.72 | 2.57 | 0.87% | $0.02 | $0.26 | -2.31% |
| CarGurus Inc | 139.50 | 5.09 | 3.31 | 8.95% | $0.06 | $0.2 | 2.43% |
| Yelp Inc | 18.70 | 3.04 | 1.76 | 5.69% | $0.07 | $0.33 | 5.72% |
| Weibo Corp | 6.98 | 0.57 | 1.22 | 0.25% | $0.14 | $0.36 | -1.48% |
| Tripadvisor Inc | 317.25 | 1.59 | 1 | 0.11% | $0.03 | $0.41 | 5.38% |
| Ziff Davis Inc | 21.38 | 0.72 | 0.96 | 3.6% | $0.14 | $0.37 | 5.88% |
| Yalla Group Ltd | 10.41 | 1.72 | 4.15 | 4.72% | $0.03 | $0.06 | 12.24% |
| Average | 58.88 | 2.41 | 3.12 | 7.41% | $4.58 | $6.32 | 5.32% |
Upon a comprehensive analysis of Meta Platforms, the following trends can be discerned:
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A Price to Earnings ratio of 22.37 significantly below the industry average by 0.38x suggests undervaluation. This can make the stock appealing for those seeking growth.
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The elevated Price to Book ratio of 7.81 relative to the industry average by 3.24x suggests company might be overvalued based on its book value.
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The stock's relatively high Price to Sales ratio of 8.75, surpassing the industry average by 2.8x, may indicate an aspect of overvaluation in terms of sales performance.
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With a Return on Equity (ROE) of 9.05% that is 1.64% above the industry average, it appears that the company exhibits efficient use of equity to generate profits.
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With higher Earnings Before Interest, Taxes, Depreciation, and Amortization (EBITDA) of $28.26 Billion, which is 6.17x above the industry average, the company demonstrates stronger profitability and robust cash flow generation.
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The gross profit of $39.55 Billion is 6.26x above that of its industry, highlighting stronger profitability and higher earnings from its core operations.
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The company's revenue growth of -12.55% is significantly lower compared to the industry average of 5.32%. This indicates a potential fall in the company's sales performance.
Debt To Equity Ratio
The debt-to-equity (D/E) ratio is a key indicator of a company's financial health and its reliance on debt financing.
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.
By evaluating Meta Platforms against its top 4 peers in terms of the Debt-to-Equity ratio, the following observations arise:
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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, PB, and PS ratios indicate that the stock is relatively undervalued compared to its peers in the Interactive Media & Services industry. On the other hand, the high ROE, EBITDA, and gross profit suggest strong profitability and operational efficiency. However, the low revenue growth rate may raise concerns about the company's future performance compared to industry competitors.
This article was generated by Benzinga's automated content engine and reviewed by an editor.
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