Three Reasons Why Meta Platforms Appeals to Growth Investors

Investors seeking stocks with above-average financial growth often find themselves attracted to companies like Meta Platforms. This attraction stems from the potential these stocks have to capture the market's attention and yield substantial returns. However, such investments are not without their risks; above-average growth often comes with increased volatility and risk. There moreover lies the chance that a company's growth phase could be ending, which might result in significant losses for investors who come in too late.

Earnings Growth: A Key Indicator

For growth investors, earnings growth is a crucial metric as they look for stocks that can offer robust profit increases. High earnings growth rates are typically taken as a sign that a company has a bright future ahead. In the case of Meta Platforms, while its historical EPS growth rate stands at 17.1%, the focus for investors should shift towards its projected growth. Meta Platforms is expected to see an EPS growth of 34.1% in the current year, far exceeding the industry average of 24.2%.

The Asset Utilization Ratio

When evaluating growth stocks, the asset utilization ratio, or sales-to-total-assets (S/TA) ratio, is often an overlooked but significant measure of a company's efficiency in using its assets to generate sales. Meta Platforms boasts an S/TA ratio of 0.64, indicating it generates $0.64 in sales for every dollar of assets, surpassing the industry average of 0.57. This suggests that Meta Platforms is more efficient with its assets than its peers. Furthermore, Meta Platforms is also excelling in terms of sales growth, with expectations of a 17.7% increase this year compared to the industry average of 9.2%.

Positive Earnings Estimate Revisions

Earnings estimate revisions are another area that investors should consider. A positive revision trend can be a good sign, indicative of upward stock price potential in the near term. For Meta Platforms, there has been a favorable trend with upward current-year earnings estimate revisions. In fact, over the past month, the Zacks Consensus Estimate for the current year's earnings has seen a rise of 0.6%.

In summary, Meta Platforms not only has garnered a Growth Score of B from a range of factors but also holds a strong position with a positive adjustment in earnings estimates. This combination makes it a standout and a compelling pick for growth-oriented investors.

Growth, Earnings, Efficiency