As one of the headline names of this week’s earnings lineup, Meta Platforms META was able to impressively exceed its fourth-quarter expectations on Wednesday.
Correlating with stellar gains over the last few years, Meta has now surpassed earnings expectations for nine consecutive quarters and investors may be wondering if it’s time to buy stock in the social media giant after its latest EPS surprise.
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Meta’s Strong Q4 Results
Primarily derived from advertising revenue, Meta’s Q4 sales of $48.38 billion topped estimates of $46.96 billion while stretching 20% from $40.11 billion a year ago.
Ad impressions across all apps increased by 6% and 11% year-over-year for the fourth quarter and full year 2024, respectively. Furthermore, average price per ad increased by 14% and 10% YoY. This came on a 5% YoY increase in user engagement with Meta’s DAP (Daily Active People) rising to an average of 3.35 billion.
Meta’s profitability increased to $20.83 billion or $8.02 per share, a 50% increase from EPS of $5.33 in the prior year quarter on net income of $14.01 billion. Surpassing the Zacks Q4 EPS Consensus of $6.68 by 20%, Meta’s surprise profit was attributed to AI-driven advertising targeting.
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Meta's Full Year Results
Overall, Meta’s total sales increased 22% in fiscal 2024 to $164.5 billion versus $134.9 billion in 2023. Annual earnings came in at $62.36 billion or $23.86 per share, a 60% spike from EPS of $14.87 in 2023 on net income of $39.09 billion.
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Meta’s Revenue Guidance
While Meta did not provide a full-year top-line guide, the company expects Q1 2025 revenue to be between $39.5-$41.8 billion with the current Zacks Consensus at $41.37 billion or 13% growth (Current Qtr below).
Based on Zacks estimates, Meta’s total sales are projected to increase another 12% in FY26. Zacks projections call for 6% EPS growth in FY25 with Meta’s bottom line projected to increase another 11% next year to $28.37 per share.
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Meta’s Attractive P/E Valuation
Trading around $700, Meta's stock is at a 26.6X forward earnings multiple which is not a stretched premium to the benchmark S&P 500.
What may appeal to long-term investors is that META has the second cheapest P/E valuation among its Magnificent 7-themed big tech peers with Alphabet’s GOOGL being the lowest at 22.4X and Tesla TSLA the highest at 123.3X.
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Takeaway
For now, Meta Platforms stock lands a Zacks Rank #3 (Hold). It's hard to count META out in regards to more upside after Meta's strong Q4 results but there are reemerging concerns about the company’s increased spending.
To that point, Meta projects capital expenditures in the range of $60-$65 billion in 2025 compared to $39.23 billion last year. That said, Meta’s success with AI ad targeting does suggest that increased spending on its artificial intelligence infrastructure could prove to be very lucrative and worth holding META in the portfolio.
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