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A Closer Look at Facebook’s Valuation Ratios

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Dec. 11 2018, Published 11:21 a.m. ET

Valuation ratios

Facebook’s (FB) TTM (trailing-12-month) price-to-sales ratio is 15.08x, while the industry average is 8.54x and the sector average is 2.67x. Peers Twitter (TWTR), Baidu (BIDU), eBay (EBAY), and Square (SQ) have TTM price-to-sales ratios of 5.36x, 7.70x, 2.64x, and 6.20x, respectively.

Facebook’s price-to-book ratio for the most recent quarter is 7.52x, and the industry and sector averages are 6.02x and 2.36x, respectively. The company’s price-to-tangible book value is 10.83x, while the industry and sector averages are 9.50x and 3.63x. Its TTM price-to-cash flow is 30.85x, and the industry and sector averages are 29.74x and 13.97x.

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Efficiency

Facebook’s TTM revenue-to-employee ratio is 1,945,859x, and the industry and sector averages are 30,250,256x and 5,668,927x, respectively. Meanwhile, its TTM net-income-to-employee ratio is 798,334x, and the industry and sector averages are 5,463,648x and 592,264x. Facebook’s TTM receivable turnover ratio is 9.91x.

Growth rates

In its most recent quarter, Facebook’s sales rose 44.83% YoY (year-over-year), while the industry’s grew 18.65% YoY and the sector’s grew 19.79% YoY. Facebook’s sales have grown 49.42% over the past five years, and the industry’s and sector’s have grown 19.39% and 4.95%, respectively.

Facebook’s EPS grew 68.83% YoY in the most recent quarter, and its five-year EPS growth rate is 62.06%.

Management’s effectiveness

Facebook’s TTM ROA (return-on-assets) ratio is 21.01x, while the industry and sector averages are 11.29x and 10.71x, respectively. Its five-year ROA ratio is 11.64x, and the industry’s and sector’s are 12.17x and 9.77x.

Facebook’s TTM return-on-investment ratio is 21.94x, and its five-year average is 12.21x. Its TTM return-on-equity ratio is 23.25x.

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