Reading future of Facebook

Facebook (Nasdaq: FB) has been outperforming Wall Street analyst expectations for revenue and earnings during the past few years, and analysts expect the company to grow its earnings by about 35 percent annually over the next five years.

Many of Facebook’s numbers are staggering. It boasts more than a billion daily active users around the world. It has been quite successful at monetizing its heavy traffic, as its annual revenue of more than $20 billion attests. Its net profit margin topping 30 percent is also impressive.

Facebook is getting better at milking more ad revenue out of its users. Advertisers are seeing the social hub as crucial to their marketing campaigns, and they’re paying more to use it.

Facebook’s stock doesn’t look like a bargain, with its price-to-earnings (P/E) ratio recently near 61, but rapid growers tend to have steep P/E ratios. Its growth is likely to slow as it gets more immense, but the stock is poised to reward patient risktolerant believers. (The Motley Fool owns shares of and has recommended Facebook.)