NEW YORK (TheStreet) -- Shares of Facebook (FB) - Get Report are higher by 1.1% to $95.20 in late afternoon trading Tuesday, one day before the social media giant releases its second quarter earnings results, after the market closes tomorrow.
TheStreet's Jim Cramer, Portfolio Manager of the Action Alerts PLUS Charitable Trust Portfolio said in a video that he's watching Facebook earnings, while urging investors to take a long-term view on the stock.
For the first quarter, the consensus estimate calls for earnings of 47 cents a share on revenue of $3.98 billion, according to Thomson Reuters.
In the same quarter of last year, the company reported earnings of 42 cents per share on revenue of $2.91 billion.
Investors will keep a close watch on costs and whether the social media giant can keep growing its monthly active users, according to Reuters.
S&P Capital IQ equity analyst Scott Kessler said in a video interview that Facebook is making substantial inroads into turning Instagram into a global social media platform that generates revenue and profits.
Menlo Park, Calif.-based Facebook is a social networking website company, with its applications enabling customers to stay connected with their friends and family.
Separately, TheStreet Ratings team rates FACEBOOK INC as a Buy with a ratings score of B. TheStreet Ratings Team has this to say about their recommendation:
"We rate FACEBOOK INC (FB) a BUY. This is driven by several positive factors, which we believe should have a greater impact than any weaknesses, and should give investors a better performance opportunity than most stocks we cover. The company's strengths can be seen in multiple areas, such as its robust revenue growth, largely solid financial position with reasonable debt levels by most measures, good cash flow from operations, expanding profit margins and solid stock price performance. We feel its strengths outweigh the fact that the company has had sub par growth in net income."
Highlights from the analysis by TheStreet Ratings Team goes as follows:
- The revenue growth greatly exceeded the industry average of 5.4%. Since the same quarter one year prior, revenues rose by 41.6%. This growth in revenue does not appear to have trickled down to the company's bottom line, displayed by a decline in earnings per share.
- FB's debt-to-equity ratio is very low at 0.01 and is currently below that of the industry average, implying that there has been very successful management of debt levels. Along with this, the company maintains a quick ratio of 7.97, which clearly demonstrates the ability to cover short-term cash needs.
- Net operating cash flow has increased to $1,700.00 million or 32.29% when compared to the same quarter last year. The firm also exceeded the industry average cash flow growth rate of 17.38%.
- The gross profit margin for FACEBOOK INC is currently very high, coming in at 94.44%. It has increased from the same quarter the previous year. Regardless of the strong results of the gross profit margin, the net profit margin of 14.45% trails the industry average.
- Compared to its closing price of one year ago, FB's share price has jumped by 33.87%, exceeding the performance of the broader market during that same time frame. We feel that the stock's sharp appreciation over the last year has driven it to a price level which is now somewhat expensive compared to the rest of its industry. The other strengths this company shows, however, justify the higher price levels.
- You can view the full analysis from the report here: FB Ratings Report