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Despite Russia Woes, Facebook (FB) Stock Remains a Buy

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Facebook FB has found itself in the news for all the wrong reasons over the last few days as Special Counsel Robert Mueller and his team release more information regarding their investigation into Russian interference with the 2016 U.S. Presidential election.

Still, as the social media giant stares down what could prove to be a prolonged period of heightened scrutiny and possible government regulation, its stock seems highly enticing.

Last Friday, Mueller indicted 13 Russian nationals and three Russian groups for interfering with the 2016 U.S. elections, with the purchasing of ads on Facebook being one of many illicit activities mentioned (also read: Mueller Indicts 13 Russians Linked to Facebook & Twitter Ads).

Then, over the weekend, Facebook advertising executive Rob Goldman drew attention for a series of tweets that pointed to a much broader Russian goal of interfering with the American democratic process in general—which Facebook later noted reflected only his personal opinion.

Mueller’s Russian investigation will likely reveal far more information and could have wide-ranging implications far beyond Facebook. But Mark Zuckerberg’s firm is also not alone, and the Mueller investigation has also pointed to attempts by Russians to use Alphabet’s GOOGL YouTube, Twitter (TWTR - Free Report) , and Instagram to sway U.S. public opinion, dating back to 2014.

“We already have about 10,000 people working on safety and security, and we're planning to double that to 20,000 in the next year to better enforce our Community Standards and review ads,” Zuckerberg said in a recent statement.

With that said, let’s take a look at why Facebook is still a stock to consider buying even as the Mueller investigation heats up.

Why Buy Facebook

Investor should think of Facebook with one word in mind: advertising. Advertising accounted for 98.5% of the company’s $12.972 billion Q4 revenues. The average price per ad on Facebook rose by 43% last quarter, and as advertisers find it increasingly hard to reach users via television and print, this number could climb even higher.

Going forward, Facebook investors should note that the social media giant is expected to account for 11.3% of all U.S. advertising spending in 2019, passing the entire print category, according to a recent eMarketer report.

Facebook has never been more trafficked or profitable, especially as it grows outside of the U.S. For instance, the world’s second largest country, India, is experiencing a mobile phone and internet boom.

Aside from its user base and advertising reach, Facebook currently presents shareholders with a ton of bang for their buck. At the moment, Facebook is trading at 24.37x earnings, which marks the cheapest price investors have ever been able to buy the social media giant’s stock in its history. While this could mean that enough investors think that Facebook’s growth-fueled glory days are over, expansion does seem to be in the cards for the foreseeable future.

The company is projected to see its sales surge nearly 42% in the current quarter, based on our current Zacks Consensus Estimates. Looking ahead to the rest of fiscal 2018, Facebook is expected to see its revenues hit $55.41 billion, which would mark a 36% year-over-year jump. The company is also projected to expand its bottom-line by nearly 17%.

Furthermore, Facebook has witnessed 17 earnings estimate revisions with 100% agreement to the upside for 2018, as well as ten upward estimates for the following year. The firm is expected to see its earnings expand at a strong annualized rate of 26.51% over the next three to five years.

Facebook is currently a Zacks Rank #1 (Strong Buy) and boasts “B” grades for both Growth and Momentum in our Style Scores system. And due to the recent market-wide selloff, shares of Facebook rest nearly 10% below their 52-week high, which means investors might consider scooping up the social media power while some have ditched the stock.

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