Quick Read
META’s 10% year-to-date selloff has created a rare entry into a 22x-P/E compounder generating $43 billion in annual free cash flow.
Alphabet’s cheaper 17x P/E masks near-zero revenue growth last quarter versus Meta’s 33%, while Snap operates at a negative operating margin.
Meta has beaten EPS estimates for 6 straight quarters, and prediction markets assign an 87% probability of another beat on July 29.
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Meta (NASDAQ:META) heads into its July 29 earnings report with its stock falling while the underlying business continues to accelerate. Shares have declined 7.87% over the past week and 9.68% year to date to $595.19.
With Meta trading at just 18x forward earnings, the recent pullback could offer an attractive entry point ahead of Q2 earnings.
Meta Trades at 18x Earnings Despite 33% Revenue Growth
Meta trades at an 18x forward P/E with an 82% gross margin, a 41.44% operating margin, and a 20.69% ROIC. Q1 revenue climbed 33.08% to $56.31 billion, ad impressions increased 19%, and average price per ad climbed 12%. Meanwhile, full-year 2025 free cash flow came in at $43.59 billion, funding $26.25 billion in buybacks alongside a $0.53 quarterly dividend.
Wall Street’s consensus price target sits at $826.01, implying 38.8% upside from the stock’s current price of $595.19. Right now, analysts assigned Meta 57 buy ratings, 6 holds, and zero sell ratings. Paying under 20x earnings for a business generating 20%-plus returns on invested capital feels attractive on a relative-value basis.
Meta Has Beaten Earnings 6 Quarters in a Row
Meta has beaten EPS estimates in six consecutive quarters, with the last miss dating all the way back to Q3 of 2022. Polymarket traders assign an 87.1% probability of another beat on July 29, and the full-chain put/call ratio sits at 0.43, with the July 31 expiry at just 0.30. Institutional positioning is decisively long into the release.
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Meta Beats Alphabet on Growth
Alphabet (NASDAQ:GOOGL) trades at a more expensive 25x forward P/E (vs Meta’s 18x), but Alphabet’s most recent quarterly revenue growth was 24% versus Meta’s 33%. There’s of course more to consider when comparing the two advertising giants, but Meta stock is cheaper on an earnings basis and is delivering higher top-line growth.
