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Facebook (NASDAQ:FB) will unveil its latest earnings tomorrow, Thursday, July 26, 2012.
Facebook (NASDAQ:FB) in under incredible pressure to beat expectations when it announces its first quarterly earnings report on Thursday, and will be under heavy investor scrutiny. Having gone public with a valuation of more than $100 billion, the company has faced several doubts since then about the state of its revenue growth and advertising sales. Investors will look for all possible signs to figure out what the company’s current state suggests for the future. With its stock having tumbled in the days after the IPO before eventually stabilizing, Facebook (NASDAQ:FB) can’t possibly afford to go into another free-fall.
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Balance Sheet Analysis: The company’s current ratio of assets to liabilities came in at 4.83 last quarter. Having a ratio above 2:1 is usually considered a good indicator of a company’s liquidity and ability to meet creditor demands. The company regressed in this liquidity measure from 5.12 in the fourth quarter of the last fiscal year to the last quarter driven in part by an increase in liabilities. Current liabilities increased 15.6 percent to $1.04 billion while assets rose 9 percent to $5.02 billion.
Analyst Ratings: With 14 analysts rating the stock a buy, two rating it a sell, and 11 rating the stock a hold, there are indications of a bullish stance by analysts. The three lead underwriters of the company’s IPO — Morgan Stanley (NYSE:MS), Goldman Sachs (NYSE:GS), and JPMorgan (NYSE:JPM) — are forecasting second-quarter earnings between 10 cents and 11 cents per share, minus IPO-related stock compensation charge, lower than the Wall Street average of 12 cents. Analysts, on average, expect revenue in the quarter to have grown 28 percent to $1.15 billion. During the same period a year ago, Facebook more than doubled its revenue. The social network, which relies heavily on advertising for its revenue, has also stepped up efforts lately to improve its mobile offerings, another segment that will be under the spotlight.
“It is unlikely that the company will set aggressive targets, as we believe that the company hopes to avoid additional negative pressure on its shares from a potential miss after its difficult IPO,” Wedbush Securities analyst Michael Pachter wrote in a note to clients on Monday.
On Wednesday, shares of Facebook (NASDAQ:FB) were trading up 2.5% at 29.15 per share ahead of their highly anticipated earnings report.
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(Company fundamentals provided by Xignite Financials. Earnings estimates provided by Zacks)
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