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Meta (NASDAQ:META) inventory has prolonged its positive aspects from the previous yr with one other sturdy set of outcomes. In post-market buying and selling on Thursday (1 January), the tech big’s inventory surged by 12%, reaching round $454 per share. That’s up from $188 a yr in the past.
So, what does this imply for traders?
The outcomes
Meta’s This autumn outcomes beat expectations by some margin. The corporate’s earnings per share got here in at $5.33 — ¢39 forward of consensus expectations.
Likewise, Meta reported revenues of $40.11bn for the quarter, forward of estimates by $940m and up a formidable 24.7% over 12 months.
This was pushed by improved consumer figures together with an 8% enhance in day by day lively folks (DAP) to three.19bn and a 6% enhance in month-to-month lively folks (MAP) to three.98bn.
In the meantime, advert impressions delivered throughout the enterprise elevated by 21% and the common worth per advert elevated by 2%.
Collectively, this sturdy enhance in consumer exercise and delicate enchancment in common achieved costs, led to sturdy steerage for the primary quarter of 2024 and a dividend.
The Mark Zuckerberg-led firm mentioned that first-quarter 2024 complete income could be within the vary of $34.5bn-$37bn vs the $33.87bn consensus view. The corporate may also pay a ¢50 dividend per share on 26 March.
Too late to purchase extra?
Fortunately I have already got a holding in Meta, and it’s accomplished very nicely since I bought the inventory again in August 2023.
Nonetheless, the corporate seems to be going from energy to energy. It beat earnings forecasts in all 4 of the quarters in 2023, and it’s guiding forward of analysts’ consensus views once more for Q1 2024.
A core a part of this has been Zuckerberg’s effectivity drive. The quarterly report highlighted that headcount was 67,317 as of December 31 — a lower of twenty-two% yr on yr. As such, margins have improved considerably. The corporate’s working margin now sits at 41%.
In reality, so efficient has this productiveness drive been over the previous 12 months, Q1 2024 earnings estimates recommend a 95% enhance in earnings per share.
So, am I too late to purchase extra? In my view, completely not. In reality, it’s nonetheless trying pretty cheap with a price-to-earnings-to-growth (PEG) ratio of 1.01.
Historically a PEG ratio beneath one suggests undervalued situations, however it doesn’t completely have in mind market dominance and anticipated earnings development past 5 years.
It’s value noting that Meta can be the most cost effective of the so-called Magnificent Seven — the large US-listed tech shares.
Dangers? There are all the time dangers, corresponding to regulatory modifications that might have an effect on it. Meta is also adversely influence by foreign money fluctuations over the following yr as financial insurance policies take a step change. Equally recessions aren’t good for advert spend.
Nonetheless, it continues to outperform, it’s dominant in its sector, and it’s undervalued in comparison with its huge tech friends. If I had the capital, I’d purchase extra at present.
