Evaluating Meta Platforms Against Peers In Interactive Media & Services Industry
This article evaluates Meta Platforms against its competitors in the Interactive Media & Services industry. Meta, with nearly 4 billion monthly active users, shows strong financial metrics, including a PE ratio of 22.34, indicating potential undervaluation. It has a high PB ratio of 7.37 and PS ratio of 8.47, suggesting strong market sentiment. Meta outperforms peers in ROE, EBITDA, gross profit, and revenue growth, with a 20.63% growth rate. Its debt-to-equity ratio of 0.27 indicates a strong financial position, relying less on debt financing compared to competitors.
In the dynamic and cutthroat world of business, conducting thorough company analysis is essential for investors and industry experts. In this article, we will undertake a comprehensive industry comparison, evaluating Meta Platforms 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 | 22.34 | 7.37 | 8.47 | 12.0% | $28.26 | $39.55 | 20.63% |
| Alphabet Inc | 19.81 | 5.97 | 5.66 | 8.3% | $36.5 | $55.86 | 11.77% |
| Baidu Inc | 9.93 | 0.85 | 1.72 | 1.76% | $7.22 | $16.11 | -2.37% |
| Pinterest Inc | 9.64 | 3.66 | 4.93 | 48.33% | $0.27 | $0.96 | 17.62% |
| Kanzhun Ltd | 30.68 | 3.17 | 6.60 | 3.05% | $0.38 | $1.51 | 15.4% |
| Autohome Inc | 15.40 | 1.01 | 3.54 | 1.25% | $0.23 | $1.35 | -6.7% |
| ZoomInfo Technologies Inc | 109.12 | 1.74 | 2.60 | 0.87% | $0.02 | $0.26 | -2.31% |
| CarGurus Inc | 141.40 | 5.16 | 3.36 | 8.95% | $0.06 | $0.2 | 2.43% |
| Yelp Inc | 18.69 | 3.07 | 1.76 | 5.69% | $0.07 | $0.33 | 5.72% |
| Weibo Corp | 7.07 | 0.58 | 1.24 | 0.25% | $0.14 | $0.36 | -1.48% |
| Tripadvisor Inc | 317.50 | 1.89 | 1 | 0.11% | $0.03 | $0.41 | 5.38% |
| Ziff Davis Inc | 21.88 | 0.74 | 0.99 | 3.6% | $0.14 | $0.37 | 5.88% |
| Yalla Group Ltd | 10.18 | 1.68 | 4.06 | 4.72% | $0.03 | $0.06 | 12.24% |
| Average | 59.27 | 2.46 | 3.12 | 7.24% | $3.76 | $6.48 | 5.3% |
Upon analyzing Meta Platforms, the following trends can be observed:
A Price to Earnings ratio of 22.34 significantly below the industry average by 0.38x suggests undervaluation. This can make the stock appealing for those seeking growth.
It could be trading at a premium in relation to its book value, as indicated by its Price to Book ratio of 7.37 which exceeds the industry average by 3.0x.
The stock's relatively high Price to Sales ratio of 8.47, surpassing the industry average by 2.71x, may indicate an aspect of overvaluation in terms of sales performance.
The Return on Equity (ROE) of 12.0% is 4.76% above the industry average, highlighting efficient use of equity to generate profits.
The company has higher Earnings Before Interest, Taxes, Depreciation, and Amortization (EBITDA) of $28.26 Billion, which is 7.52x above the industry average, indicating stronger profitability and robust cash flow generation.
With higher gross profit of $39.55 Billion, which indicates 6.1x above the industry average, the company demonstrates stronger profitability and higher earnings from its core operations.
The company is experiencing remarkable revenue growth, with a rate of 20.63%, outperforming the industry average of 5.3%.
Debt To Equity Ratio
The debt-to-equity (D/E) ratio is a measure that indicates the level of debt a company has taken on relative to the value of its assets net of liabilities.
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.
In terms of the Debt-to-Equity ratio, Meta Platforms stands in comparison with its top 4 peers, leading to the following comparisons:
Among its top 4 peers, Meta Platforms has a stronger financial position with a lower debt-to-equity ratio of 0.27.
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 ratio is low compared to peers, indicating potential undervaluation. The high PB and PS ratios suggest strong market sentiment and revenue multiples. In terms of ROE, EBITDA, gross profit, and revenue growth, Meta Platforms outperforms its industry peers, reflecting strong financial performance and growth potential.
This article was generated by Benzinga's automated content engine and reviewed by an editor.
