Facebook (FB) Rising Before The Market Opens

Editor's Note: Any reference to TheStreet Ratings and its underlying recommendation does not reflect the opinion of TheStreet, Inc. or any of its contributors including Jim Cramer.

Trade-Ideas LLC identified Facebook ( FB) as a pre-market leader candidate. In addition to specific proprietary factors, Trade-Ideas identified Facebook as such a stock due to the following factors:

  • FB has an average dollar-volume (as measured by average daily share volume multiplied by share price) of $1.6 billion.
  • FB traded 189,617 shares today in the pre-market hours as of 8:00 AM.
  • FB is up 2% today from yesterday's close.

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More details on FB:

Facebook, Inc. operates as a social networking company worldwide. It provides a set of development tools and application programming interfaces that enable developers to integrate with Facebook to create mobile and Web applications. FB has a PE ratio of 78. Currently there are 25 analysts that rate Facebook a buy, no analysts rate it a sell, and 2 rate it a hold.

The average volume for Facebook has been 22.9 million shares per day over the past 30 days. Facebook has a market cap of $183.9 billion and is part of the technology sector and internet industry. The stock has a beta of 0.77 and a short float of 1.1% with 1.27 days to cover. Shares are up 4.8% year-to-date as of the close of trading on Thursday.

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TheStreetRatings.com Analysis:

TheStreet Quant Ratings rates Facebook as a buy. 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, expanding profit margins, good cash flow from operations 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 ratings report include:
  • The revenue growth greatly exceeded the industry average of 5.9%. 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.
  • 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.
  • Net operating cash flow has increased to $1,700.00 million or 32.29% when compared to the same quarter last year. Despite an increase in cash flow, FACEBOOK INC's average is still marginally south of the industry average growth rate of 41.51%.
  • Compared to its closing price of one year ago, FB's share price has jumped by 26.38%, 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.

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