Meta Platforms (META) Reports Next Week: Wall Street Expects Earnings Growth

The market is anticipating that Meta Platforms (META) will show an increase in earnings compared to the previous year when it releases its financial results for the quarter ending September 2024. This consensus outlook is a crucial part of understanding the company's earnings trajectory, but actual stock prices will likely be influenced by how the results line up with these forecasts.

If Meta's earnings exceed expectations in the upcoming report, slated for October 30, the stock could rise. Conversely, if the figures fall short, a decline in stock value may follow.

While the immediate reaction of stock prices and future earnings forecasts largely depend on what management shares about the business environment during the earnings call, it is essential to evaluate the chances of a positive earnings surprise.

Zacks Consensus Estimate

Meta Platforms is projected to report earnings of $5.17 per share for this quarter, marking a year-over-year growth of 17.8%. Expected revenues are around $40.16 billion, which is an increase of 17.6% compared to the same quarter last year.

Estimate Revisions Trend

The consensus earnings per share (EPS) estimate has seen a revision upward by 0.81% in the past month, reflecting analysts' upgraded outlook on the company's performance.

Importantly, the changes made by individual analysts may not always mirror the overall consensus adjustment.

Earnings Whisper

Analyzing estimate revisions leading up to earnings releases provides insight into the business conditions for that quarter. The Zacks Earnings ESP (Expected Surprise Prediction) model encapsulates this understanding.

Through comparing the Most Accurate Estimate to the Zacks Consensus Estimate, this model aims to capture last-minute adjustments by analysts that could signify more precise forecasts. A positive or negative Earnings ESP score indicates potential deviations from the consensus estimates, but the model is notably effective for positive readings only.

A positive Earnings ESP signal strongly suggests a likelihood of exceeding earnings expectations, especially when paired with a favorable Zacks Rank of #1 (Strong Buy), #2 (Buy), or #3 (Hold). Historically, stocks with this combination have beaten expectations almost 70% of the time, where a solid Zacks Rank enhances the predictive strength of the Earnings ESP.

However, a negative Earnings ESP does not imply a guaranteed earnings miss, as forecasting potential misses is more challenging for stocks with unfavorable Earnings ESP counts or a Zacks Rank of #4 (Sell) or #5 (Strong Sell).

How Have the Numbers Shaped Up for Meta Platforms?

For Meta Platforms, the Most Accurate Estimate is currently better than the Zacks Consensus Estimate, indicating a growing optimism among analysts regarding the company's earnings potential. This results in a positive Earnings ESP of +2.83%.

Additionally, the stock has a Zacks Rank of #2, suggesting a strong probability that Meta will outperform consensus EPS estimates.

Does Earnings Surprise History Hold Any Clue?

When assessing future earnings estimates, analysts often look back at how well a company has performed against past consensus expectations. In Meta’s case, last quarter, expectations were for the company to earn $4.70 per share, yet it outperformed with earnings of $5.16 per share, achieving a surprise of +9.79%.

Over the last four quarters, Meta Platforms has consistently exceeded EPS estimates each time.

Bottom Line

It’s important to note that whether a company's earnings beat or miss doesn't always dictate the movement of its stock price. Other factors can lead stocks to decline even after a successful earnings report or rise despite missing targets.

However, investing in stocks anticipated to exceed earnings expectations can bolster the likelihood of success. For this reason, examining a company's Earnings ESP and Zacks Rank before quarterly results is advisable. Utilizing tools like the Earnings ESP Filter can help identify valuable stocks for trading.

Overall, Meta Platforms appears to be in a strong position to achieve earnings that beat market expectations, but investors should consider other influencing factors before making investment decisions this earnings season.

An Industry Player's Expected Results

Within the Zacks Internet - Software sector, another notable company, Paypal (PYPL), is also expected to disclose its earnings, with forecasts set at $1.08 per share for the quarter ending September 2024. This marks a year-over-year decline of 16.9%. The company’s projected revenue for the quarter is approximately $7.86 billion, representing an increase of 5.9% year-over-year.

The consensus EPS estimate for Paypal has been positively revised by 1.2% over the last month, leading to a positive Earnings ESP of 1.92%. This, combined with a Zacks Rank of #3 (Hold), suggests a good chance that Paypal could also exceed its EPS estimate. Notably, the company has surpassed consensus EPS estimates in each of its previous four quarters.

To stay informed about upcoming earnings releases, make sure to check the earnings calendar.

Meta, Earnings, Growth