On Wednesday, Meta (META) delivered an impressive earnings report for the quarter that ended in June. CEO Mark Zuckerberg has been calling this the “year of efficiency” since February after the company took a step backward. Since then, it’s been smooth sailing.
Meta’s revenue soared to $32 billion for the quarter, which was an 11% increase from this time last year – and the figure outperformed the analyst consensus, too. This was the second quarter in a row of improvement. And it wasn’t just revenue that climbed, either.
The company also posted an improvement in profitability at $7.79 billion for the quarter. This was a 16% increase over the same quarter last year, and it beat analysts’ estimates as well.
Zuckerberg attributes this success to “the company’s most exciting roadmap in a while”. Engagement is soaring across the company’s suite of apps, with Llama 2, Threads, Reels, and new AI products rolling out soon. And, as fall looms closer and closer, so too does the highly anticipated release of Quest 3. Across all these apps, daily active users gained 5%.
Zuck also spoke to the two underlying goals of the “year of efficiency”: becoming a stronger tech company and improving financial results. It’s safe to say the company is on the right path to ticking both these boxes if this earnings report is any indication.
As a result of Wednesday’s news, shares of META climbed more than 11%. While they retreated a bit, they’ve settled at around a 9% gain for the past week. In looking even further back, the company has gained 100% in the past year after bottoming out last November.
All that being said, it appears as if the stock shows no signs of slowing down. So, should you buy into the year of efficiency that Zuck is selling and jump aboard the META hype train?
We took a look through the VectorVest stock analysis software and have 3 things to share that will help you make your decision one way or the other.
While META Has Poor Upside Potential, the Stock’s Safety and Timing are Excellent Right Now
The VectorVest system helps you simplify your trading strategy by giving you clear, actionable insights in 3 simple ratings: relative value (RV), relative safety (RS), and relative timing (RT).
Each of these sits on an easy-to-understand scale of 0.00-2.00, with 1.00 being the average. Pick stocks with higher ratings to win more trades with less work. Or, better yet, follow the clear buy, sell, or hold recommendation VectorVest offers for any given stock, at any given time. As for META, here’s what you need to see:
- Poor Upside Potential: The RV rating compares a stock’s long-term price appreciation potential (forecasted 3 years out) to AAA corporate bond rates & risk. As for META, the RV rating of 0.60 is poor. What’s more, the stock is overvalued right now with a current value of just $162/share.
- Excellent Safety: In looking at the RS rating of 1.44, we can see that META has excellent safety. This rating is calculated by analyzing the company’s financial consistency & predictability, debt-to-equity ratio, and business longevity.
- Excellent Timing: As you can see by looking at how the stock has performed over the past year, META has excellent timing - as confirmed by the RT rating of 1.48. This rating is based on the direction, dynamics, and magnitude of the stock’s price movement. It’s taken day over day, week over week, quarter over quarter, and year over year.
The overall VST rating of 1.28 is considered very good for META - but is it enough to earn the stock a buy recommendation? Does poor upside potential outweigh excellent safety and timing, or is it the other way around?
No need to play the guessing game or let emotion influence your decision-making. Get a clear buy, sell, or hold recommendation today by getting a stock analysis free at VectorVest.
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VectorVest advocates buying safe, undervalued stocks, rising in price. Despite poor upside potential, META has excellent safety and timing. The company is on a roll after its second consecutive quarter of growth, and the year of efficiency appears to be well underway.
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