Is Facebook Inc (FB) Helping This Industry? You’ll Be Surprised

Page 1 of 2

Is Facebook A Good Investment Right Now?Pittsburgh Tactical Firearm’s Facebook Inc (NASDAQ:FB) page was recently closed, and the owner is concerned. He received hundreds of emails and phone calls over the past several days from some of his 27,000 followers, informing and questioning why the page was shut down. While we can’t control what happens there, lets look at what kind of role Facebook Inc (NASDAQ:FB) and its policies may have on our investments.

More of the story

The numbers show that Facebook Inc (NASDAQ:FB) now has over 1 billion users, and it generated approximately $5.1 billion in 2012 revenues — more than 37% higher than 2011′s revenues. Erik Lowry, the owner of Pittsburgh Tactical Firearms, was running a giveaway contest of an AR-15 when his Facebook page was inexplicably shut down. He didn’t know why, but he did  open another page which was also shut down. He has asked Facebook Inc (NASDAQ:FB) – at least 100 times — for an explanation, but has been left to guess what is going on.

While Facebook Inc (NASDAQ:FB) has not commented on the matter, Lowry has said:

There are no guidelines that say you can’t give away guns. I still don’t know what’s going on. This kind of censorship is unconstitutional.”

Many arguments could be made for either side of this debate. Is it an infringement of rights, or is it a company’s right to decide whom it does business with? I will leave that up for others to decide, but what I do know is gun companies are flourishing with all the hype that has evolved in this area over the past few years.

Who might be benefiting the most

Both Sturm, Ruger & Company (NYSE:RGR) and Smith & Wesson Holding Corporation (NASDAQ:SWHC) have gross margins in the 30% range, while Facebook Inc (NASDAQ:FB)’s is 73.2%. This should be expected as Ruger and Smith and Wesson have to build, market, and sell products while Facebook generates most of its revenues from areas like advertisements.

Over the last three years, Facebook Inc (NASDAQ:FB)’s revenues have increased an amazing 258%. Facebook is a fairly new company, and rapid growth is more likely for it than companies that have been in business since 1852, like Smith & Wesson Holding Corporation (NASDAQ:SWHC). Sturm, Ruger & Company (NYSE:RGR) and Smith and Wesson have increased revenues by 93% and 1.5% respectively since 2010.

Metrics

These companies FCF yields are all very different, but some show better value than others. Again, understand that I am not comparing Facebook, a social media company, to a completely different industry, but I do want to show who, in my opinion, offers a better opportunity.

Facebook Inc (NASDAQ:FB) shows a FCF yield of 0.6% with a market cap of $62 billion.  Facebook’s P/E is 2,500, but that figure is exaggerated because of its youth and its stock’s vulnerability to the media.

Both Sturm, Ruger & Company (NYSE:RGR) and Smith & Wesson Holding Corporation (NASDAQ:SWHC) show cheaper stocks as their FCF yields are 6.5% and 8% respectively. Both of these companies have a market cap that is under the $1 billion mark.Smith and Wesson and Ruger show P/E’s of 8.4 and 13.4 respectively. Ruger is the only company here that offers dividends to its shareholders, and its 3.1% dividend is almost a full percentage point better than the industry average.

Page 1 of 2
Comments
Insider Monkey Small Cap Strategy
Insider Monkey Small Cap Strategy

Insider Monkey beat the market by 52 percentage points in 24 months. Our beta is only 1.2 (don't click this link if beating the market isn't important to you).

Lists

Reign of Terror: The 10 Most Ruthless Politicians in History

On the Move: The 10 Fastest Growing Businesses in 2015

Fast Money: The 10 Highest Paying Fast Food Restaurants

Mixing It Up: The 14 Best Music Mashups of 2014

Rito Pls Buff: The 10 Least Played Champions in LoL Season 4

10 Covers of Popular Songs that are Better than the Originals

Must See TV: The 9 Most Anticipated Shows of 2015

The 15 Biggest Box Office Bombs of All Time

10 Things The World Can’t Stand About Americans

Picture Perfect: The 6 Smartphones with the Best Cameras

The 10 Best Countries To Work In the World

A Profitable Day At The Track: 5 Tips For Betting On Horses

Tearing You Apart: 6 Bad Habits That Ruin Relationships

Learning on the Job: The 6 Biggest Mistakes Parents Make

Shopaholics Rejoice: The 12 Biggest Malls in the World

Fright Night: 10 Horror Movies Based on True Stories

Mach Mania: The 10 Fastest Jets in the World

Military Heavyweights: The 10 Countries with the Most Tanks

All In: The 7 Richest Poker Players in the World

Abracadabra: The 10 Best Magicians in the World

The 10 Richest Asian Countries in the World in 2014

Eyes in the Sky: 10 Things You Need to Know About Drones

Rising Stars: The 6 Best Silicon Valley Startups

Military Muscle: The 5 Most Advanced Armies in South America

All that Glitters: The 7 Most Luxurious Jewelry Brands in the World

5 Things You Didn’t Know About ISIS but Should

Empowering Your Money: The 5 Best Energy Stocks to Invest In

The 11 Best Android Apps You Can’t Get on iOS

The 10 Most Important International Conflicts in 2014

Mood Enhancers: The 20 Most Uplifting Songs of all Time

Lover Beware: The 8 Countries that Cheat the Most

Breath of Fresh Air: The 25 Countries with the Best Air Quality on the Planet

Singles Beware: The 8 Worst Mistakes Made on First Dates

Healthy and Happy: The 10 Countries with Lowest Healthcare Costs

The 6 Best Company Team Building Activities to Build Workplace Camaraderie

Ships Ahoy: The 10 Busiest Shipping Ports in the World

10 Productivity Tips to Save You Time and Help You Do More With Less

Grab a Bite: The Most Popular Fast Food Restaurants in America

Friday Night Thirst: The 10 Most Popular Cocktails in the World

The 6 Greatest Unsolved Mysteries We May Never Figure Out

7 Useless Products You Never Should’ve Bought

The 5 Reasons Why You’re Single and Miserable

The 7 Most Addictive Foods in the World We Can’t Stop Eating (Even Though We Should)

5 Amazing Places You Can Swim with Dolphins

The Top 7 Most Livable Countries In The World

The 10 Most Expensive Baseball Cards Ever Pulled From A Pack

The 5 Easiest Second Languages to Learn for English Speakers

Silver Spoon: The 6 Richest Families in the World

The 20 Countries with the Largest Prison Populations in the World

The Top 10 Richest Actors in the World

Subscribe

Enter your email:

Delivered by FeedBurner

X

Thanks! An email with instructions is sent to !

Your email already exists in our database. Click here to go to your subscriptions

Insider Monkey returned 47.6% in its first year! Wondering How?

Download a complete edition of our newsletter for free!