Meta Platforms (META) Reports Next Week: Wall Street Expects Earnings Growth

The financial world is eagerly awaiting the upcoming earnings report from Meta Platforms (META), expected to be released on October 30, 2024. Analysts anticipate a significant year-over-year increase in earnings, driven by higher revenues during the quarter ending September 2024. Understanding the consensus outlook is crucial for gauging the company's performance as it directly impacts its stock price.

If Meta Platforms manages to outperform these expectations in its earnings report, the stock price is likely to rise. Conversely, if the results fall short of projections, the stock may take a hit. The overall impact on the stock will heavily rely on how management discusses business conditions during the earnings call following the report.

Expected Financial Performance

Meta Platforms is projected to report earnings of $5.17 per share, which would signify a year-over-year growth of approximately 17.8%. Additionally, revenues are expected to reach $40.16 billion, reflecting a 17.6% increase from the same period last year.

Revisions and Estimates

In the past 30 days, analysts have slightly increased the consensus earnings per share (EPS) estimate by 0.81%. This upward revision highlights that analysts have become more optimistic about the company's financial performance.

It's important for investors to note that while the overall trend of estimate revisions gives a signal about the company’s prospects, individual analyst changes may not contribute evenly to the aggregate shifts.

Earnings Surprise Potential

The Zacks Earnings ESP (Expected Surprise Prediction) model is a valuable tool for predicting earnings surprises. This model compares the most accurate estimate for the quarter with the Zacks consensus estimate, providing insight into analysts’ most current predictions.

A positive Earnings ESP indicates a likelihood of actual earnings deviating positively from consensus, especially when combined with strong Zacks Rank ratings of #1 (Strong Buy), #2 (Buy), or #3 (Hold). Research shows that stocks exhibiting this combination have nearly a 70% chance of producing a positive surprise.

For Meta Platforms, recent estimates show that the most accurate predictions exceed the consensus, yielding a positive Earnings ESP of +2.83%. Coupled with a Zacks Rank of #2, this presents a strong case for anticipating an earnings beat.

Historical Performance Insights

Looking at past performance can provide context for future earnings results. In the previous quarter, Meta Platforms surprised analysts with earnings of $5.16 per share when the expectation was $4.70, resulting in a significant beat of +9.79%. Over the past four quarters, the company has successfully exceeded earnings expectations each time.

Conclusion

While an earnings beat can positively influence stock movement, it’s crucial to remember that many variables affect market reactions. Stocks occasionally decline despite favorable earnings due to other investor concerns. Conversely, unexpected catalysts can uplift stocks that miss expectations.

However, targeting stocks predicted to outperform earnings expectations certainly raises the chances of a successful investment. Hence, examining a company’s Earnings ESP and Zacks Rank before earnings announcements is advisable. Using the Earnings ESP Filter can aid in identifying the best stocks for investment.

In summary, Meta Platforms is positioned as a solid candidate for an earnings surprise. Investors should remain attentive to additional factors when considering investment strategies around this earnings report.

Industry Context

In the same industry, PayPal (PYPL) is also set to report earnings soon, with expectations of $1.08 per share for the September quarter, representing a year-over-year decrease of 16.9%. Its projected revenue is around $7.86 billion, up 5.9% from the previous year. Despite the decline in earnings, the consensus EPS for PayPal has been revised upwards by 1.2% in the last month, resulting in an Earnings ESP of 1.92% and a Zacks Rank of #3, suggesting a likely earnings beat.

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Meta, Earnings, Growth