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A Closer Look at Facebook’s Valuation

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Valuation ratios

Facebook’s (FB) trailing-12-month price-to-sales ratio is 7.48x, while the industry average is 5.62x, and the sector average is 123.63x.

Peers Twitter (TWTR), Amazon (AMZN), Baidu (BIDU), and Alphabet (GOOGL) have trailing-12-month price-to-sales ratios of 5.36x, 3.50x, 4.49x, and 6.88x, respectively.

 

Facebook’s price-to-book ratio for the most recent quarter is 4.83x, and the industry and sector averages are 5.06x and 1.74x, respectively. The company’s price-to-tangible book value is 6.40x, while the industry and sector averages are 8.71x and 2.58x, respectively. Its trailing-12-month price-to-cash flow is 15.09x, and the industry and sector averages are 19.76x and 12.46x, respectively.

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Profitability ratio

Facebook’s trailing-12-month gross margin stands at 84.26% compared to the industry and sector averages of 40.63% and 43.56%, respectively. Facebook’s five-year gross margin is 84.86%.

Facebook’s trailing-12-month operating margin is 47.10%, whereas the industry and sector averages are 23.57% and 22.41%, respectively.

Facebook’s trailing-12-month net profit margin is 41.96% compared to the industry and sector averages of 25% and 17.48%, respectively. Its trailing-12-month EBITDA margin stands at 54.70%, while its five-year average is 52.76% compared to the industry average of 31.09%.

Facebook’s pretax margin for the trailing 12 months comes in at 47.89% compared to the industry average of 31.74%. Its five-year average margin stands at 44.08% compared to the industry average of 28.98%.

Facebook’s trailing-12-month effective tax rate totals 12.39% compared to the industry average of 23.56%. Its five-year average, on the other hand, is 22.18%.

Management’s effectiveness

 Facebook’s trailing-12-month ROA (return-on-assets) ratio is 25.40x, while the industry and sector averages are 11.68x and 13.74x, respectively. Its five-year ROA ratio is 16.46x. The industry and the sector have five-year ROA ratios of 11.92x and 10.36x, respectively.

Facebook’s trailing-12-month return-on-investment ratio is 26.77x, and its five-year average is 17.22x. Its trailing-12-month return-on-equity ratio is 28.73x.

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