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In this updated coverage research report, we reexamine the communications services sector company Meta Platforms Inc. — META 0.00%↑ — to see if it continues to meet QualityValue Investing’s (QVI) Real-Time Stock Picks criteria based on our proprietary checklist analysis of the business’s current wealth and the share price’s present value.
Meta Platforms | Company Current Wealth
Value Proposition
Meta Platforms is a dividend-paying large-cap stock in the communications services sector’s interactive and media services industry. It was added to the QVI Real-Time Stock Picks on September 19, 2023, at a $304.15 cost basis per share, adjusted for the new dividend.
Meta Platforms, Inc. engages in the development of products that enable people to connect and share with friends and family through mobile devices, personal computers, virtual reality headsets, and wearables worldwide. It operates in two segments, Family of Apps and Reality Labs.
Founded as Facebook, Inc. in 2004, the company changed its name to Meta Platforms, Inc. in October 2021. Meta Platforms is headquartered in Menlo Park, California, USA.
Economic Moat
Morningstar assigns Meta Platforms a wide moat rating based on its intangible assets and the potent network effect around its Family of Apps business.
QVI’s Value Proposition Elevator Pitch for META
Meta Platforms has as wide a moat as there is in social media, where its 3.6 billion Facebook, Instagram, Messenger, Threads, and WhatsApp users fuel a captive advertising powerhouse.
QVI’s value proposition rating for Meta Platforms: Bullish.
Returns on Management
Revenue Growth and Net Profit Margin
Per the table below, Meta Platforms’ trailing three-year annualized revenue growth was double-digit positive and aligned with the S&P 500 topline growth of 16.40%. Moreover, the company’s positive revenue growth of +23.06 % topped the broader market’s +18.20% increase for the most recently reported twelve months.
Further down the income statement, Meta Platforms had a high-double-digit net profit margin from a showstopping 81.50% gross margin, outperforming the S&P 500’s net of 20.90% from a gross of 54.10%.
Returns on Equity and Invested Capital
Meta Platforms’ senior management produced a return on equity, or ROE, double QVI’s targeted threshold while trailing the S&P 500’s ROE of 56.70%.
Stock buyback programs often elevate ROE, and in February, Meta Platforms’ board of directors authorized an expanded $50 billion of share repurchases on top of the $40 billion approved in 2023.
Meta Platforms’ return on invested capital, or ROIC, doubled QVI’s threshold and aligned with the broader market’s 23.50% return. In addition, the company’s ROIC exceeded its weighted average cost of capital, or WACC, demonstrating that its senior executives are outstanding capital allocators (Source of WACC: GuruFocus).
QVI’s business fundamentals rating for Meta Platforms: Bullish.
Click or Pinch Out to Expand
Next, we’ll look at the company’s enterprise downsize risks, the stock price’s present value, including share price downside risks, and the investment thesis, each exclusive to Quality Value Investing’s premium (paying) subscribers.
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Unless noted, all data presented is sourced from Charles Schwab & Co. and Yahoo Finance as of the market close on December 10, 2024, and intended for illustration only.
Disclosure: As of the date of this research report, I/we held no beneficial positions in META common shares in our family portfolio. I wrote this report myself, and it expresses my own opinions. I am not receiving compensation for it other than from Substack paid subscriptions. I have no business relationship with any company whose stock is mentioned in this post.
Additional Disclosure: Quality Value Investing by David J. Waldron’s primary ticker research reports are for informational purposes only. The accuracy of the data cannot be guaranteed. Narrative and analytics are impersonal, i.e., not tailored to individual needs nor intended for portfolio construction beyond his family portfolio, which is presented solely for educational purposes. David is an individual investor and author, not an investment adviser. Readers should always engage in independent research or due diligence and consider, as appropriate, consulting a fee-only certified financial planner, licensed discount broker/dealer, flat fee registered investment adviser, certified public accountant, or specialized attorney before making any investment, income tax, or estate planning decisions.
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