Facebook and Exxon Mobil are both Overvalued Stocks for Different Reasons (Video)
XOM is trading as a Bond in this yield chasing QE inspired Central Bank World, and FB is your classic momentum stock. The first lesson of modern investing is that everything is a trade in financial markets. Avoid being the bag holder in either of these two stocks. The day of their demise is merely a calendar event on the investing time clock horizon.
Facebook – valuation
0:07analysis between ExxonMobil and Facebook I think both stocks are overvalued but
0:13for different reasons so little background ExxonMobil is trading at a
0:18premium
0:19the reason Dean is the rest of the names in the space and energy sector they’re
0:24worried about PK risk bankruptcy and ExxonMobil is the one with the best
0:32credit rating relative to its peers and so people who want to have energy
0:36exposure investing ExxonMobil plus we’re in a dividend chasing environment and
0:42Exxon Mobil’s dividend is very attractive and relative to a lot of the
0:48peers in the industry space it seems safer so incentives train like a bond
0:54right now Facebook has momentum stark street with momentum valuations I every
1:02year
1:03street picks out a couple that call it for stocks and everybody invest in a
1:10herd mentality in the right way going up like musical chairs the game you don’t
1:18want to be stuck holding branch on the way down which was once momentum high
1:23flyer
1:25so let’s delve into the numbers ExxonMobil’s market cap is three hundred
1:29and sixty seven billion if we get facebook its 342
1:38that drew my attention that a facebook maybe a little heavy on the
1:47overvaluation side it is rather complex doing the sort of modern analysis
1:53comparing industrial tech you know when you consider what they are and what
2:01their inventory what their assets are how do you put a multiple
2:06growth
2:12intellectual property or access assets internet properties what are they worth
2:23versus physical assets in industrial sent so trailing p/e for ExxonMobil this
2:3229 that should tell you that given the price of oil how much their premium it’s
2:42trading at right now
2:43exxon actually with better profit better quarterly growth higher gold price has
2:49traded much lower than it is now
2:51which shows the you changing environment we live in violation of all assets in
2:58total place people need a place to stick their money and the fact that it’s the
3:05best energy space as far as most the most unlikely to go out of business
3:16Facebook a 73 being valued as a true growth stock and forward p/e for exxon
3:24is 24 and P is for Facebook is 26 so they’re extrapolate
3:32the growth in earnings forward so that metric works if they can continue to
3:38keep it up
3:40128 for ExxonMobil ratio 098 for Facebook price-to-book
3:542.1 64 ExxonMobil price-to-sales 1.69 priced to sell 17 points 400 Facebook
4:05price-to-book 7.27
4:09profit margins for ExxonMobil about 6 percent operating margin four percent
4:16profit margin 23% almost 24 for Facebook operating margin 37 percent return on
4:25assets for ExxonMobil 1.68% 9.82 for Facebook return on equity 7.45 for
4:35ExxonMobil return on equity
4:38for Facebook so revenue start looking at the income statement revenue is 220
4:48billion for exxon with revenue per share 50 250 quarterly revenue growth negative
4:5728% the same three metrics Facebook twenty billion $7 revenue per share
5:06quarterly revenue growth almost 52 percent profit for ExxonMobil is over 90
5:15billion 1994 billion and its 15 to interface but even 27.7 four billion
5:25versus 9.4 for Facebook earnings per share
5:33$3.11 for ExxonMobil
5:37dollar 64 for Facebook this is really just fascinating matter quarterly
5:45earnings growth year over year Exxon 64 percent negative and almost a hundred
5:52and ninety-five percent for positive for Facebook that’s why these things just a
5:57rocket ship and everybody and their uncle is piled into this and really nice
6:06upward trend to total cash exxon only has five billion already has twenty
6:16billion in their coffers
6:19total cash per share it 1.17 vs 7.21 for Facebook total debt
6:46and 43 total debt it’s a nice business right if you can run it
6:52generation year-on-year quarterly gross profit having no debt
6:57and you know tons of cash which put on even more human capital work etc
7:07when you think about value-added you think a dynamic spoke to go to put on a
7:14company that is able to pull off all these things but there’s a downside to
7:18that because when you actually don’t have physical stuff and you’re relying
7:26on internet present that goes in and out of fashion where you know people love
7:32you
7:33gasoline for combustion unions for you know what time the lifespan of that
7:40person’s the fickleness of popularity things can change pretty quickly in the
7:47popularity game remember pet rocks used to be a thing which studied a school
7:55that kept coming up pet rocks I didn’t even know what they were but they
8:00existed but literally somebody’s sold rocks for a business and people bought
8:05them so and you see my kids toys what people will buy when they become a fat
8:10human culture is pretty bad innes let’s just say that so the so we went over
8:26total cash with our total debt total debt equities 24 points 15 not
8:34applicable for Facebook current ratios you appoint 914 Facebook 13.1 64
8:42Facebook so book value per share 4125 34 ExxonMobil and 16.5 for for Facebook
8:51operating cash flow 27 billion for ExxonMobil levered free cash flow
8:57negative a million courses are most tender for Facebook and six billion in
9:06laboratory cash 40.9% 07928 change actually ExxonMobil is up 2% Facebook up
9:2548 percent the S&P is down about 4% comparisons 52 week high of 90 52 week
9:35low at 6655 sure my dad bought 6652 cash sitting on the sidelines for that very
9:45purpose but it was probably a little cautious thinking relative value given
9:50the price of oil that exxon Chicago and I think he was expecting to go and so
9:54sometimes you try to get the price valuation perfect and you’re in a
10:00different environment and you get it wrong it probably makes sense from his
10:05standpoint are probably
10:09expected that it was probably a $50.00 $55.00 was a good place to add some 66
10:18ends up being really nice by an opportunity for value investors probably
10:22helps that when a dividend chasing environment so 50 day moving average is
10:2786 281 Facebook 52 week high is a hundred and twenty 10 a 52 week low is
10:35seventy to 50 day moving average 214 turned a moving average is 107 wrote for
10:45ExxonMobil billion
10:50and it’s about to point to for for Facebook insiders less than 1%
11:014% for Facebook which would make sense
11:07by institutions 50% for ExxonMobil and 68 for Facebook short ratio of about 1%
11:17of food for both companies these companies sure I guess
11:27to do so if they thought it was overvalued you don’t shorten momentum
11:33stock and you know ExxonMobil is probably punished and people thinking
11:39it’s overvalued so
11:43here’s the difference dividends as a growth tech company versus 3.38% trail
11:56and annual dividend yield trailing is 3.3%
12:03you know payout ratio 94% people really love the fact that drives them which are
12:12you so stock from a stock perspective just the technicals for ExxonMobil and
12:24one week basis you can see their support around this 87 to the downside and 89
12:35close to 90 on the upside with this middle tier here there for the longer
12:43term this is the chance to buy it when everybody was get hammered at the
12:48beginning year and they were doing a shark attack had a nice run up $18 from
12:58those get a year basis this is the time and you have this real window when you
13:05gotta 6655 and this is where you need to buy it and this is when always getting
13:11killed the end of the driving season and that was a huge buying opportunity
13:20that’s in February put in a higher see their support of 272 area
13:26took out that high
13:31longer term and it got up here this 104 moved all the way down now is actually a
13:37really nice short they’re back in July 2014 all the way down to 68 sort of
13:46found this equilibrium here around $88 sheer three-year time frame if we look
13:56longer than a couple of times to buy it I think doesn’t show it but I think it’s
14:01like i 65 50 years somewhere around there that intraday you could get a
14:06little pop down their five-year chart 66 has been really nice tie up to tracks on
14:13mobile and over ten years time span 55 to the downside 95 sort of resistance
14:20area with 75 sort of midterm value area for the longer term basis that this
14:30twenty-five year basis just nice value stark
14:37forever he owned another company works ExxonMobil pot and he’s just want to do
14:44it but it crowd that just hold onto shares for a long time basically for tax
14:49reasons and in fact they increased their dividend it steady
14:55and what’s not to love in this name so thirty years and do it
15:02modern investing era support level as you got it sort of change
15:07financial markets became
15:11electronic and people have an opportunity to invest a lot of the
15:15pricing dynamics changed 55 and secondary longer and shorter time friend
15:23shows up on the chart to sport area the 7d sort of the third basic level support
15:28and then this ninety is a general resistance area so get to Facebook chart
15:37we can see over here that this $119 areas weekly support six-month basis
15:49106 116 so six-month support resistance becomes support this 116 level on a
