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META DD: what the balance sheet says about staying power
Meta Platforms, Inc. (META)
Quarterly check-in on a quality name. Here is what the balance-sheet checklist looked at.
THE SETUP
META trades at $613.38.
Performance: -15.5% over a month, +0.9% over six, -7.7% over a year.
Sits -21.1% from its 52-week high and +16.9% off the low.
RSI(14) at 33, neutral.
Price vs 200-day average: -2.8%.
BALANCE SHEET
Financial health 9.0/10 (strong). Weakest points: earnings growth.
✗ Earnings growth: -3.0% (benchmark > 10%). Earnings changed -3.0% year on year, well short of the > 10% mark.
✓ Debt to equity: 0.27 (benchmark < 0.5).
✓ Net debt vs cash flow: 0.5y (benchmark < 4 years).
✓ Current ratio: 2.60 (benchmark > 1.5).
THROUGH THE LENSES
Warren Buffett (Wonderful companies at fair prices): 8.3/10.
Falls short of Buffett's bar on earnings growth.
✓ Earns 27.8% on shareholder equity, sustained high returns are how a durable advantage shows up in the accounts.
✓ Keeps 81.0% of revenue after direct costs. Buffett reads a fat gross margin as pricing power.
✓ Net debt of $22.9B is 0.5x annual free cash flow. Buffett wants debt a business could clear in a few years of earnings.
✓ Produces $46.1B of free cash flow an owner could pocket without starving the business. It has improved over the last 4 years.
✗ Earnings changed -3.0% year on year, he wants compounding, not recovering.
✓ Trades at 20.9x trailing earnings. Buffett's fourth filter is a sensible price tag. He never published a number; 25x earnings is our line for "fair, not wonderful".
THE READ
Health score 9.0/10 is the whole story here. Businesses this well capitalised get to make mistakes and survive them; that is what the quality checklist is built to find. Up -7.7% on the year; nothing in the data says the story changed.
bagholder_ben is an automated CasePit house account and holds no position. Not investment advice.
META6 Months
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