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Facebook Could Deliver Impressive Third Quarter Earnings

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Robust 3Q15 results expected

As discussed in the previous part of this series, Facebook (FB) is scheduled to release its 3Q15 earnings results on November 4. Wall Street analysts expect Facebook to report EPS (earnings per share) of $0.52 and revenue of $4.4 billion. The expected revenue of $4.4 billion would translate to a YoY (year-over-year) growth rate of 36%, and the projected EPS of $0.52 would translate to a YoY growth rate of 30%.

Facebook beat analysts’ estimates in 2Q15

Facebook reported a 39% increase in revenue for the quarter ending June 30, 2015, with adjusted EPS of $0.50 and revenue of $4.0 billion. The company’s monthly active users, or MAUs, in 2Q15 were 1.3 billion, compared to 1.1 billion in 2Q14. This was an increase of 13% YoY.

Although the company beat analysts’ estimates in terms of projected revenue and EPS, the rate of growth has been slowing down for the last few consecutive quarters in terms of YoY revenue, as you can see in the above chart.

Other technology companies’ 3Q15 earnings

Amazon (AMZN), Alphabet (GOOG), and Microsoft (MSFT) are some of the major firms in the technology sector that reported strong results for their 3Q15 earnings last week. Amazon reported adjusted EPS of $0.17, beating analysts’ estimates of a loss of $0.10.

Alphabet posted revenue of $18.7 billion, beating analysts’ estimates of $18.5 billion, and Microsoft reported adjusted EPS of $0.67 cents, beating analysts’ estimates of $0.58 cents.

For portfolio exposure to Facebook, you could consider investing in the Technology Select Sector SPDR Fund (XLK), which has 4% exposure to FB.

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