In the ever-changing and fiercely competitive business landscape, conducting thorough company analysis is crucial for investors and industry experts. In this article, we will undertake a comprehensive industry comparison, evaluating Meta Platforms (NASDAQ:META) and its primary competitors in the Interactive Media & Services industry. By closely examining key financial metrics, market position, and growth prospects, our aim is to provide valuable insights for investors and shed light on company's performance within 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 | 26.86 | 8.73 | 9.56 | 9.77% | $22.06 | $33.21 | 18.87% |
| Alphabet Inc | 22.44 | 6.59 | 6.23 | 8.55% | $35.74 | $51.79 | 15.09% |
| Baidu Inc | 11.19 | 0.83 | 1.61 | 2.98% | $9.27 | $17.16 | -2.58% |
| Pinterest Inc | 94.75 | 7.08 | 6.07 | 1.0% | $-0.0 | $0.71 | 17.71% |
| Kanzhun Ltd | 29.05 | 2.73 | 6.09 | 2.92% | $0.36 | $1.6 | 28.85% |
| ZoomInfo Technologies Inc | 366.67 | 2.26 | 3.36 | 1.35% | $0.07 | $0.26 | -3.25% |
| Yelp Inc | 23.22 | 3.39 | 1.98 | 5.21% | $0.06 | $0.33 | 4.41% |
| Ziff Davis Inc | 43.07 | 1.41 | 1.90 | -2.68% | $0.02 | $0.3 | 3.69% |
| Weibo Corp | 6.48 | 0.64 | 1.40 | 3.78% | $0.14 | $0.37 | 5.05% |
| JOYY Inc | 11.94 | 0.40 | 1.10 | 1.17% | $0.06 | $0.21 | -1.48% |
| Tripadvisor Inc | 54.23 | 2.08 | 1.16 | 4.33% | $0.1 | $0.48 | -0.19% |
| Cars.com Inc | 33.39 | 2.54 | 1.86 | 3.75% | $0.06 | $0.15 | 3.05% |
| Average | 63.31 | 2.72 | 2.98 | 2.94% | $4.17 | $6.67 | 6.4% |
Upon a comprehensive analysis of Meta Platforms, the following trends can be discerned:
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At 26.86, the stock's Price to Earnings ratio is 0.42x less than the industry average, suggesting favorable growth potential.
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With a Price to Book ratio of 8.73, which is 3.21x the industry average, Meta Platforms might be considered overvalued in terms of its book value, as it is trading at a higher multiple compared to its industry peers.
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The Price to Sales ratio of 9.56, which is 3.21x 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 9.77%, which is 6.83% above the industry average. This suggests efficient use of equity to generate profits and demonstrates profitability and growth potential.
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Compared to its industry, the company has higher Earnings Before Interest, Taxes, Depreciation, and Amortization (EBITDA) of $22.06 Billion, which is 5.29x above the industry average, indicating stronger profitability and robust cash flow generation.
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The company has higher gross profit of $33.21 Billion, which indicates 4.98x above the industry average, indicating stronger profitability and higher earnings from its core operations.
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The company's revenue growth of 18.87% is notably higher compared to the industry average of 6.4%, showcasing exceptional sales performance and strong demand for its products or services.
Debt To Equity Ratio
The debt-to-equity (D/E) ratio is an important measure to assess the financial structure and risk profile of a company.
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 assessing Meta Platforms against its top 4 peers using the Debt-to-Equity ratio, the following comparisons can be made:
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Meta Platforms exhibits a stronger financial position compared to its top 4 peers in the sector, as indicated by its lower debt-to-equity ratio of 0.3.
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This suggests that the company has a more favorable balance between debt and equity, which can be seen as a positive aspect for investors.
Key Takeaways
The PE, PB, and PS ratios for Meta Platforms indicate that it may be overvalued compared to its peers in the Interactive Media & Services industry. However, its high ROE, EBITDA, gross profit, and revenue growth suggest strong operational performance and growth potential relative to industry competitors.
This article was generated by Benzinga's automated content engine and reviewed by an editor.
