NEW YORK (TheStreet) -- TheStreet's Jim Cramer says sometimes a company reports such a spectacular quarter that investors want to get out before the insiders do, and that is the case with Facebook (FB - Get Report).
Cramer says the social media giant reported a number so extraordinary that the stock is cheap based on 2016 numbers. But on the conference call, Facebook went over the number repeatedly and said it would not be able to maintain this level of growth. Furthermore, the company said it is not monetizing some components that analysts expected it to monetize.
Cramer, though, thinks this is a case of under-promising now and over-delivering later, and he does not believe growth is slowing at Facebook; however, the market is speaking loudly about the stock and shows that people do believe it.
- FB's very impressive revenue growth greatly exceeded the industry average of 11.7%. Since the same quarter one year prior, revenues leaped by 63.1%. Growth in the company's revenue appears to have helped boost the earnings per share.
- Although FB's debt-to-equity ratio of 0.03 is very low, it is currently higher than that of the industry average. Along with this, the company maintains a quick ratio of 11.46, which clearly demonstrates the ability to cover short-term cash needs.
- Powered by its strong earnings growth of 566.66% and other important driving factors, this stock has surged by 121.84% over the past year, outperforming the rise in the S&P 500 Index during the same period. Setting our sights on the months ahead, however, we feel that the stock's sharp appreciation over the last year has driven it to a price level which is now relatively expensive compared to the rest of its industry. The implication is that its reduced upside potential is not good enough to warrant further investment at this time.
- Current return on equity exceeded its ROE from the same quarter one year prior. This is a clear sign of strength within the company. When compared to other companies in the Internet Software & Services industry and the overall market, FACEBOOK INC's return on equity is below that of both the industry average and the S&P 500.
- You can view the full analysis from the report here: FB Ratings Report