![]() So now we rank these scores against the other 99 firms, score them and weight the scores. The only other metric worth mentioning is the free cash flow ("FCF") Margin, which is an extremely healthy 26%. Their advice centered on reducing debts before a recession hit, and building and maintaining a healthy cash stockpile, both of which Meta has done very well, knowing that Meta has no debt obligations to speak of, and that is a very significant cash stockpile. Starting with reviewing Meta’s balance sheet, we cast our mind back to the advice from business leaders during the 2008 Great Recession. So with this very healthy picture in mind, we no look to see how Meta is prepared to face a recession. ![]() Margin improvement is low against the peer group, but I don’t think anyone in the comments will argue that a 90% improvement in margin is a risky metric. Meta doesn’t pay a dividend yet, so we skip on to firm future outlooks, which again outperform its peers across the board. ![]() This would then explain the covered ratio of 0 (no debt, no debt obligations to service), while we see an outperforming current ratio of 2.81. We won’t question Seeking Alpha’s calculation on this, given it is such a minor figure. This is possibly because the firm has no debts, but has various liabilities (such as capital leases, accounts payable, income taxes payable, other current liabilities) that might be considered debt under a debt to equity ratio. Meta’s obligation structure is slightly odd however, if you look at Meta’s financials, they show Meta has no long-term or short-term debt (but has a debt-to-equity ratio). META has a license to print profit in its current operating environment. Meta’s base financial health is near-perfect, with the most minor of debts on its balance sheets relative to it’s equity, a phenomenal EBITDA showing excellent internal efficiency, and a hard-to-beat net margin of 31%. (Don’t worry, we’ll still do a little dissecting!) However, with Meta, the firm has one of the best-looking summaries I’ve looked at so far, and it deserves to be viewed in its full form below. Ordinarily in this series, I would break down a firm’s financial health analysis and dissect each line piece by piece. Want to skip the articles and dive right into the data? You can download my data and calculations here and see how the Top 100 US Firms compare on Recession Preparedness META's Base Financial Health (The Top 100 US Firms referred to can be found on this Seeking Alpha screener) (Data & prices correct as of pre-market 13th July, 2022) firms list, and needs almost no introduction.Ī full breakdown of the methodology and explanation behind the calculations is available in my introductory article, Ranking Recession Readiness: Is Google Prepared For The Recession? ( NASDAQ: META), probably one of the most recognizable firms in the top 100 U.S. This article seeks to explore the preparedness of Meta Platforms Inc. firms are positioned to strive through a downturn, and which firms will stumble. Ranking Recession Readiness is a series of articles I’m authoring based on academic research along with advice from business leaders who took their firms through the Great Recession of 2008, to help investors identify which top 100 U.S. With a recession inbound, or potentially already upon us, smart investors will already be thinking about where to park their capital, and no doubt be looking to exit firms they expect will suffer under heightened interest rates and poor economic conditions. looks set to raise its rates right into a recession, slamming the brakes on an economy still recovering from COVID as war rages on in Ukraine, throwing the whole world into chaos. With rapidly rising fed rates in response to equally rapidly rising inflation, the U.S. I apologize for this error, and the algorithm has been corrected. Author’s Note: Those who have been following the Ranking Recession Readiness series will note I had already awarded a 3rd place to Google ( GOOG) ( GOOGL), however, due to an error discovered in my algorithm, Meta’s score had been unfairly penalized.
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