Financial Review: Alphabet (NASDAQ:GOOG) & Meta Platforms (NASDAQ:META)

Meta Platforms (NASDAQ:META) and Alphabet (NASDAQ:GOOG) are both large-cap communication services companies, but which is the superior business? We will compare the two companies based on the strength of their analyst recommendations, profitability, valuation, institutional ownership, earnings, dividends and risk.

Institutional & Insider Ownership

79.9% of Meta Platforms shares are held by institutional investors. Comparatively, 27.3% of Alphabet shares are held by institutional investors. 13.5% of Meta Platforms shares are held by company insiders. Comparatively, 13.0% of Alphabet shares are held by company insiders. Strong institutional ownership is an indication that endowments, large money managers and hedge funds believe a stock will outperform the market over the long term.

Earnings and Valuation

This table compares Meta Platforms and Alphabet”s revenue, earnings per share (EPS) and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Meta Platforms	$200.97 billion	7.69	$60.46 billion	$29.33	20.69
Alphabet	$402.84 billion	8.44	$132.17 billion	$19.16	14.51

Alphabet has higher revenue and earnings than Meta Platforms. Alphabet is trading at a lower price-to-earnings ratio than Meta Platforms, indicating that it is currently the more affordable of the two stocks.

Analyst Recommendations

This is a summary of recent ratings and price targets for Meta Platforms and Alphabet, as provided by MarketBeat.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Meta Platforms	0	7	47	3	2.93
Alphabet	1	5	35	6	2.98

Meta Platforms currently has a consensus price target of $833.12, indicating a potential upside of 37.31%. Alphabet has a consensus price target of $413.38, indicating a potential upside of 48.68%. Given Alphabet’s stronger consensus rating and higher possible upside, analysts clearly believe Alphabet is more favorable than Meta Platforms.

Dividends

Meta Platforms pays an annual dividend of $2.10 per share and has a dividend yield of 0.3%. Alphabet pays an annual dividend of $0.88 per share and has a dividend yield of 0.3%. Meta Platforms pays out 7.2% of its earnings in the form of a dividend. Alphabet pays out 4.6% of its earnings in the form of a dividend. Both companies have healthy payout ratios and should be able to cover their dividend payments with earnings for the next several years. Meta Platforms has raised its dividend for 1 consecutive years and Alphabet has raised its dividend for 1 consecutive years.

Profitability

This table compares Meta Platforms and Alphabet’s net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
Meta Platforms	31.15%	30.73%	18.08%
Alphabet	50.03%	46.63%	31.83%

Risk & Volatility

Meta Platforms has a beta of 1.19, suggesting that its share price is 19% more volatile than the S&P 500. Comparatively, Alphabet has a beta of 1.19, suggesting that its share price is 19% more volatile than the S&P 500.

Summary

Alphabet beats Meta Platforms on 10 of the 16 factors compared between the two stocks.

About Meta Platforms

Meta Platforms, Inc. engages in the development of products that enable people to connect and share with friends and family through mobile devices, personal computers, virtual reality headsets, and wearables worldwide. It operates in two segments, Family of Apps and Reality Labs. The Family of Apps segment offers Facebook, which enables people to share, discuss, discover, and connect with interests; Instagram, a community for sharing photos, videos, and private messages, as well as feed, stories, reels, video, live, and shops; Messenger, a messaging application for people to connect with friends, family, communities, and businesses across platforms and devices through text, audio, and video calls; and WhatsApp, a messaging application that is used by people and businesses to communicate and transact privately. The Reality Labs segment provides augmented and virtual reality related products comprising consumer hardware, software, and content that help people feel connected, anytime, and anywhere. The company was formerly known as Facebook, Inc. and changed its name to Meta Platforms, Inc. in October 2021. The company was incorporated in 2004 and is headquartered in Menlo Park, California

About Alphabet

Alphabet Inc. offers various products and platforms in the United States, Europe, the Middle East, Africa, the Asia-Pacific, Canada, and Latin America. It operates through Google Services, Google Cloud, and Other Bets segments. The Google Services segment provides products and services, including ads, Android, Chrome, devices, Gmail, Google Drive, Google Maps, Google Photos, Google Play, Search, and YouTube. It is also involved in the sale of apps and in-app purchases and digital content in the Google Play and YouTube; and devices, as well as in the provision of YouTube consumer subscription services. The Google Cloud segment offers infrastructure, cybersecurity, databases, analytics, AI, and other services; Google Workspace that include cloud-based communication and collaboration tools for enterprises, such as Gmail, Docs, Drive, Calendar, and Meet; and other services for enterprise customers. The Other Bets segment sells healthcare-related and internet services. The company was incorporated in 1998 and is headquartered in Mountain View, California.