Facebook shares given a “Hold” recommendation and “C” rating: How long will it last?

On February 07, 2014, The Street Ratings team issued a “Hold” recommendation for Facebook (FB) while giving it a “C” rating. As of 2:38 p.m on Friday, the stock rose 2.94%, reaching a share price of $63.99.

The Street Ratings team defended their position by stating, “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 and impressive record of earnings per share growth. However, as a counter to these strengths, we find that the company’s return on equity has been disappointing.”

Of course, Facebook’s (FB) growth has surpassed the industry average of 17.2%. Not to mention, its revenues have increased by 63.1% over the same quarter of last year. Both of these factors have served to augment the company’s earnings per share (EPS). With a debt-to-equity ratio of 0.03% being significantly better than the industry average–it is still considered quite weak. However, when it comes to being financially stable enough to take care of short-term cash requirements; Facebook (FB) has a quick ratio of 11.46.

Over the course of just a year, the company’s earning’s growth has soared by 566.66%, which has increased its stock price by 95.51%. Facebook has received the honor of moving past the escalation of the S&P 500 Index within the same time frame. Nonetheless, the Street ratings team believe that all of this success has garnered the stock as “expensive,” hence the “Hold” and “C” rating. Furthermore, Facebook’s return on equity is below that of the industry average.

For Facebook’s fourth quarter earnings report, it earned 31 cents per share as a result of $2.59 billion in sales. The company’s market cap has moved beyond $150 billion. Despite the “C” rating, with Facebook’s progress and investment in the mobile market, it may soon become a “buy” once again.

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