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

Meta Platforms (META) is set to release its quarterly earnings report for the period ending September 2024, and analysts predict a significant rise in earnings compared to the previous year. This increase is attributed to higher revenue expectations, which will play a crucial role in how the stock performs following the announcement.

The earnings report is anticipated on October 30, and if the results exceed expectations, it could lead to a positive movement in the stock price. Conversely, a failure to meet these projections may result in a decline in value.

It is essential to consider not just the earnings numbers, but also how management discusses the business outlook during the earnings call. This commentary can heavily influence investor sentiment and future earnings forecasts.

Zacks Consensus Estimate

Meta Platforms is expected to report quarterly earnings of $5.17 per share, reflecting a year-over-year growth of approximately 17.8%. Additionally, revenue is anticipated to reach $40.16 billion, marking a 17.6% increase from the same quarter last year.

Estimate Revisions Trend

In the preceding month, the consensus estimate for earnings per share (EPS) has been revised upwards by 0.81%. This upward adjustment indicates that analysts have positively reassessed their expectations for the company's performance.

It's worth noting that while the aggregate changes in estimates are significant, individual analyst revisions may vary and could influence the overall consensus differently.

Earnings Whisper

Revisions in estimates can provide insight into the expected performance of a company. The Zacks Earnings ESP (Expected Surprise Prediction) is a tool that compares the Most Accurate Estimate to the Zacks Consensus Estimate for the quarter. The Most Accurate Estimate represents the latest predictions from analysts, which are often the most informed due to recent developments.

A positive Earnings ESP suggests that actual earnings may exceed consensus estimates, especially when paired with a Zacks Rank of #1 (Strong Buy), #2 (Buy), or #3 (Hold). Historical data shows that this combination leads to positive surprises nearly 70% of the time. If the Earnings ESP is negative, predicting an earnings beat becomes more challenging.

How Have the Numbers Shaped Up for Meta Platforms?

For Meta Platforms, the Most Accurate Estimate is currently above the Zacks Consensus Estimate, indicating that analysts are increasingly optimistic about the company's earnings outlook. This has resulted in a positive Earnings ESP of +2.83%.

Additionally, Meta holds a Zacks Rank of #2, further supporting the notion that the company is likely to surpass the consensus EPS estimate in its upcoming earnings report.

Does Earnings Surprise History Hold Any Clue?

Looking back at previous quarters can provide valuable insights into a company's consistency in meeting or exceeding earnings expectations. For the last reported quarter, analysts anticipated that Meta would generate earnings of $4.70 per share; however, the actual earnings came in at $5.16, which was a positive surprise of +9.79%.

Over the past four quarters, Meta Platforms has consistently beaten consensus EPS estimates, showcasing a track record of performance that may bolster investor confidence moving forward.

Bottom Line

While an earnings beat or miss can influence stock prices, it is not always the only factor at play. Stocks can decline after an earnings beat due to other disappointing aspects, while unexpected positive factors can lead to gains despite an earnings miss.

Investors often have a better chance of success when betting on stocks expected to surpass earnings expectations. Therefore, analyzing a company's Earnings ESP and Zacks Rank before its earnings announcement is prudent, as these metrics can help identify the best investment opportunities.

Meta Platforms emerged as a strong candidate for an earnings beat, but investors should remain vigilant about other influencing factors before deciding to invest or withdraw prior to their earnings announcement.

An Industry Player's Expected Results

Within the Zacks Internet - Software sector, Paypal (PYPL)- is also preparing to release its earnings report soon, with forecasts suggesting earnings of $1.08 per share for the quarter ending September 2024. This projection reflects a year-over-year decline of around 16.9%. Revenues for this quarter are expected to be $7.86 billion, representing a 5.9% increase from the previous year.

Paypal’s consensus EPS estimate has been revised 1.2% higher in the last 30 days, with a higher Most Accurate Estimate leading to an Earnings ESP of 1.92%. This combination, along with its Zacks Rank of #3 (Hold), suggests that Paypal may also beat the consensus EPS estimate, having achieved this feat in each of the past four quarters.

Stay informed on upcoming earnings announcements to make well-informed investment decisions.

Earnings, Meta, Stock