Is Facebook an Outperform?

E = Equity to Debt Ratio Is Strong        

The debt-to-equity ratio and balance sheet for Facebook are strong… for now.   

Debt-To-Equity

Cash

Long-Term Debt

FB

0.23

$9.63 Billion

$2.36 Billion

GOOG

0.10

$48.09 Billion

$.21 Billion

 

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T = Technicals on the Stock Chart Are Mixed

Facebook has been all over the map since its IPO. This is hardly comforting for investors. On the other hand, traders with good timing have enjoyed this rollercoaster ride immensely. Year-to-date, Facebook has underperformed Google (NASDAQ:GOOG) and the S&P 500.

1 Month

Year-To-Date

1 Year

3 Year

FB

-4.25%

6.39%

N/A

N/A

GOOG

12.54%

12.09%

31.13%

45.96%

S&P 500

2.83%

6.86%

14.19%

47.31%

 

At $28.32, Facebook is trading below its 50-day SMA, and above its 100-day and 200-day SMA.    

50-Day SMA

28.76

100-Day SMA

25.33

200-Day SMA

23.87

 

E = Earnings Have Been Unimpressive               

This story really boils down to earnings. If Facebook could show consistent EPS growth, then all doubters would be proven wrong, but at this point in time, that seems to be highly unlikely. Of course, top-line growth has been superb.

2008

2009

2010

2011

2012

Revenue ($)in billions

272.00M

777.00M

1.97

3.71

5.09

Diluted EPS ($)

-0.06

0.10

0.28

0.46

0.01

 

When we look at the last quarter on a year-over-year basis, we see an increase in revenue, but a decline in earnings. This should come as no surprise.

12/2011

3/2012

6/2012

9/2012

12/2012

Revenue ($)in billions

1.13

1.06

1.18

1.26

1.59

Diluted EPS ($)

0.14

0.09

-0.08

-0.02

0.02

 

Let’s take a look at the next page for the Trends and Conclusion. Is this stock an OUTPERFORM, a WAIT AND SEE, or a STAY AWAY?