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NEW YORK (TheStreet) -- Famed value investor Benjamin Graham taught that investors must conduct a thorough fundamental analysis of securities to determine their intrinsic value and risk. Here's the beginning of such an analysis on Facebook (FB) - Get Meta Platforms Inc. Report. (MG refers to "modern Graham.")

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FB data by YCharts

Defensive Investor - must pass at least six of the following seven tests: Score = 2/7

    Adequate Size of Enterprise - market capitalization of at least $2 billion - PASS

    Sufficiently Strong Financial Condition - ratio of current assets over current liabilities  greater than 2 - PASS

    Earnings Stability - positive earnings per share for at least 10 straight years - FAIL

    Dividend Record - has paid a dividend for at least 10 straight years - FAIL

    Earnings Growth - earnings per share has increased by at least 1/3 over the last 10 years using three-year averages at beginning and end of period - FAIL

    Moderate PEmg ratio - PEmg is less than 20 - FAIL (PEmg is a price-to-earnings ratio that uses a weighted average of earnings per share from the last five years.)

    Moderate Price to Assets - price-to-book ratio is less than 2.5 or PB x PEmg is less than 50 - FAIL

    Enterprising Investor - must pass at least 4 of the following 5 tests or be suitable for a defensive investor: Score = 4/5

      Sufficiently Strong Financial Condition, Part 1 - current ratio greater than 1.5 - PASS

      Sufficiently Strong Financial Condition, Part 2 - Debt to Net Current Assets ratio less than 1.1 - PASS

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      Earnings Stability - positive earnings per share for at least five years - PASS

      Dividend Record - currently pays a dividend - FAIL

      Earnings growth - EPSmg greater than five years ago - PASS

      Valuation Summary

      Key Data:

      Recent Price


      MG Value


      MG Opinion


      Value Based on 3% Growth


      Value Based on 0% Growth


      Market Implied Growth Rate






      Current Ratio


      PB Ratio


      Balance Sheet - 3/31/2014

      Current Assets


      Current Liabilities


      Total Debt


      Total Assets


      Intangible Assets


      Total Liabilities


      Outstanding Shares


      Earnings Per Share

      2014 (estimate)














      Earnings Per Share - ModernGraham

      2014 (estimate)













      Facebook is suitable for the enterprising investor, but not for the defensive investor, because of the company's lack of dividends, short operating history, and high PEmg and price-to-book ratios.

      The company appears overvalued because its earnings growth rate, based on an earnings estimate of 14 cents a share for this year, falls below the market's implied estimate of 48.18% earnings growth.

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      At the time of publication, the author had no position the stock mentioned.

      This article represents the opinion of a contributor and not necessarily that of TheStreet or its editorial staff.