Facebook’s Fundamental Analysis



Deciphering Facebook’s valuations

Facebook’s (FB) current enterprise value (or EV) is ~$412.6 billion. In comparison, its peers have the following enterprise values:

Facebook’s EV-to-adjusted-EBITDA[1. enterprise value to adjusted earnings before interest, tax, depreciation, and amortization] multiple for the trailing 12 months is 25.5x. Its EV-to-estimated-EBITDA multiple is 17.6x.

Facebook’s EV-to-sales multiple for the trailing 12 months is 13.6x, and its expected EV-to-sales multiple for 2018 is 8.4x.

Facebook’s trailing-12-month EV-to-cash-flow multiple is 23.3x, and its trailing-12-month EV-to-free-cash-flow is 31.6x.

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Earnings and sales

Facebook (FB) reported EPS (earnings per share) of $3.60, and its EPS for 2017 is forecast to be ~$4.90.

Facebook’s 2016 EPS resulted from total sales of $30.3 billion, which grew 53% annually. Sales for 2017 are expected to expand from ~$38.6 billion in 2016 to ~$49.4 billion in 2018.

Inside Facebook’s price and EBITDA metrics

With a book value per share of ~$21.50, Facebook (FB) is trading at a price-to-book value of 7.2x. The stock’s estimated book value is ~$25.50 per share.

Facebook’s price-to-sales ratio is 14.7x, and its estimated price-to-sales ratio is 11.6x.

Facebook stock is trading at a price-to-EBITDA ratio of 27.5x. In comparison, peers Baidu, Alphabet, eBay, and PayPal are trading at price-to-EBITDA ratios of 23.9x, 20.9x, 12.9x, and 27.7x, respectively.


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