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How Facebook Compares to Broad Indexes

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What led to the revenue growth in 2016 and 9M17?

Facebook (FB) revenues rose 54% and 47% in 2016 and 9M17, respectively. The US and the rest of the world drove the growth during the periods. Advertising triggered the growth offset by payments and other fees.

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How did the diluted EPS perform in 2016 and 9M17?

Gross margin rose 58% and 48% in 2016 and 9M17, respectively. Operating expenses rose 29% and 34% in 2016 and 9M17, respectively. As a result, income from operations rose 100% and 63% in 2016 and 9M17, respectively. Interest and other income have also grown substantially in both the periods. All of these factors led to a 178% and 76% growth in net income for 2016 and 9M17, respectively. Diluted EPS rose 171% and 73% in 2016 and 9M17, respectively. The company has maintained a good free cash flow position.

How did the dividend yield and price perform?

The company has not offered any dividend yet. The company prices have gained 55.6% on a YTD basis. Facebook’s PE of 51.3x compares to a sector average PE of 33.5x.

How does the company compare to the broad indexes?

The S&P 500 (SPX-INDEX) (SPY) offers a dividend yield of 2.3%, a PE ratio of 23.3x, and a YTD return of 18.4%. The Dow Jones Industrial Average (DJIA-INDEX) (DIA) has a dividend yield of 2.2%, a PE ratio of 21.9x, and a YTD return of 23.1%. The NASDAQ Composite (COMP-INDEX) (ONEQ) has a PE ratio of 25x and a YTD return of 27.1%.

The iShares Core High Dividend ETF (HDV) is a dividend ETF with 12% exposure to technology. It has a PE of 21x and a dividend yield of 3.2%. The iShares International Select Dividend ETF (IDV) is a dividend ETF with 2% exposure to technology. It has a PE of 13.5x and a dividend yield of 4%.

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