Industry Indicators: FANGs

Industry Indicators: FANGs

Yardeni Research, Inc.

November 5, 2021

Dr. Edward Yardeni

516-972-7683 eyardeni@

Joe Abbott

732-497-5306 jabbott@

Please visit our sites at blog.

thinking outside the box

Table Of Contents Table Of Contents

FANG Performance & Share of S&P 500

1

S&P 500 Ex-FANG Valuation

2

FANG Valuation

3-6

Relative Forward Earnings and Revenues

7

FANG Portfolio Contribution Analysis

8-9

FAANGM Portfolio Contribution Analysis

10

November 5, 2021 / Industry Indicators: FANGs

Yardeni Research, Inc.



FANG Performance & Share of S&P 500

Figure 1.

2200

2200

1900

MARKET CAP: FANG PERFORMANCE RELATIVE TO S&P 500 EX-FANG*

1900

1600

(ratio scale, indexed to 100 on 12/21/2012, when all FANG issues were trading)

1600

1300

1300

1000

1000

FANG (1208.3)

700

S&P 500 (311.2)

700

S&P 500 ex-FANG (281.2)

400

400

11/5

100 2013

2014

2015

2016

2017

2018

* FANG stocks include Facebook, Amazon, Netflix, and Google (Alphabet). Market cap includes both classes of Alphabet. Source: Standard & Poor's and Yardeni Research Inc.

2019

2020

2021

2022

100

2023

2024

Figure 2.

16

16

FANG STOCKS PERCENT SHARE OF S&P 500 MARKET CAP AND

FORWARD EARNINGS & REVENUES

14

(percent)

14

12

Share of S&P 500

12

Capitalization (12.5)

10

Earnings (5.6)

10

Revenues (0.7)

8

8



6

6

10/21

4

4

2

2

0 2013

2014

2015

2016

2017

2018

* FANG stocks include Facebook, Amazon, Netflix, and Google (Alphabet). Market cap includes both classes of Alphabet. Source: I/B/E/S data by Refinitiv.

2019

2020

2021

2022

2023

0 2024

Page 1 / November 5, 2021 / Industry Indicators: FANGs

Yardeni Research, Inc.



S&P 500 Ex-FANG Valuation

Figure 3.

24

FORWARD P/E RATIO: S&P 500 and S&P 500 EX-FANG*

22

S&P 500 (21.1)

20

S&P 500 ex-FANG (19.6)

10/21

18

16

14

12 2.50

2.25

P/E Difference Attributable

2.00

To FANG (1.5)

1.75

1.50

1.25

1.00

.75

.50

.25 2013

2014

2015

2016

2017

2018

2019

* Price divided by consensus forward earnings forecast. FANG stocks include Facebook, Amazon, Netflix, and Google (Alphabet). Source: I/B/E/S data by Refinitiv.

2020

10/21

2021

2022

24

22

20

18

16

14

12 2.50

2.25

2.00

1.75

1.50

1.25

1.00

.75

.50

.25

2023

2024

Figure 4.

3.0

FORWARD P/S RATIO: S&P 500 and S&P 500 EX-FANG*

2.8

2.6

2.4

2.2

2.0

1.8

1.6

S&P 500 (2.80)

1.4

S&P 500 ex-FANG (2.64)

1.2 .25

.20

P/S Difference Attributable To FANG (0.15)

.15

.10

.05

.00 2013

2014

2015

2016

2017

2018

* Price divided by consensus forward sales forecast. FANG stocks include Facebook, Amazon, Netflix, and Google (Alphabet). Source: I/B/E/S data by Refinitiv.

2019

2020

10/21

10/21

2021

2022

3.0 2.8 2.6 2.4 2.2 2.0 1.8 1.6 1.4 1.2 .25

.20

.15

.10

.05

.00

2023

2024

Page 2 / November 5, 2021 / Industry Indicators: FANGs

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FANG Valuation

Figure 5.

8300

8300

7300 FANG STOCKS, FORWARD EARNINGS, & VALUATION

7300

6300

FANG Stocks*

x70

6300

5300

11/05/21

x60 5300

4300

Blue Angels Implied Market Cap Index (billion $)**

x50

4300

x40

3300

3300

2300

2300

1300

1300

Latest Forward P/E (52.7)

300 2013

2014

2015

2016

2017

2018

* FANG stocks include Facebook, Amazon, Netflix, and Google (Alphabet). Market cap includes both classes of Alphabet.

** Implied price index calculated using forward earnings times forward P/Es. Source: I/B/E/S data by Refinitiv.

2019

2020

2021

2022

300

2023

2024

Figure 6.

75

5.5

FANG STOCKS FORWARD VALUATION*

70

11/5

5.0

65

4.5

60

4.0

55

3.5

50

Forward P/E** (52.7) 45

Forward P/S*** (4.9)

40 2013

2014

2015

2016

2017

2018

2019

2020

* FANG stocks include Facebook, Amazon, Netflix, and Google (Alphabet). * Market cap divided by aggregate forward consensus expected operating earnings per share. ** Market cap divided by aggregate forward consensus expected revenue per share.

Source: I/B/E/S data by Refinitiv.

2021

2022

3.0

2.5

2.0

2023

2024

Page 3 / November 5, 2021 / Industry Indicators: FANGs

Yardeni Research, Inc.



FANG Valuation

Figure 7.

150

150

FANG STOCKS FORWARD P/E*

P/E capped at 140 due to extreme values.

140

140

Facebook (24.0)

130

Amazon (69.4)

130

Netflix (49.9)

120

Google (Alphabet) (26.6)

120

110

110

100

100

90

90

80

80

70

70

60

60

50

50

40

40

30

20

10 2013

2014

2015

2016

2017

2018

2019

2020

11/5

2021

2022

30

20

10

2023

2024

* Price divided by 12-month forward consensus expected operating earnings per share. Source: I/B/E/S data by Refinitiv.

Figure 8.

16

FANG STOCKS FORWARD P/S*

14

12

16

Facebook (6.9)

14

Amazon (3.3)

Netflix (8.5)

Google (Alphabet) (6.7)

12

10

10

8

8

11/5

6

6

4

4

2

0 2013

2014

2015

2016

2017

2018

* Price divided by 12-month forward consensus expected sales per share. Source: I/B/E/S data by Refinitiv.

2019

2020

2021

2022

2

0

2023

2024

Page 4 / November 5, 2021 / Industry Indicators: FANGs

Yardeni Research, Inc.



FANG Valuation

Figure 9.

910

910

760 META (FACEBOOK) FORWARD EARNINGS, & VALUATION

x50

760

610

x40

610

460

x30

460

310

x20

310

160

160

Latest Forward P/E (24.0)

Price Index: Meta (Facebook) 11/05/21 Blue Angels Implied Price Index**

10 2013

2014

2015

2016

2017

2018

** Implied price index calculated using forward earnings times forward P/Es. Source: Standard & Poor's Corporation and I/B/E/S data by Refinitiv.

2019

2020

2021

2022

10

2023

2024

12020 9020 6020

3020

Figure 10.

AMAZON FORWARD EARNINGS, & VALUATION Stock Price: Amazon 11/05/21 Blue Angels Implied Price Index**

x150 x125 x100 x75

x50

12020 9020 6020

3020

Latest Forward P/E (69.4)

20 2013

2014

2015

2016

2017

2018

** Implied price index calculated using forward earnings times forward P/Es. Source: Standard & Poor's Corporation and I/B/E/S data by Refinitiv.

2019

2020

2021

2022

20

2023

2024

Page 5 / November 5, 2021 / Industry Indicators: FANGs

Yardeni Research, Inc.



FANG Valuation

Figure 11.

2502

2002 NETFLIX FORWARD EARNINGS, & VALUATION

1502

Price Index: Netflix

1002

11/05/21

Blue Angels Implied Price Index** 502

x150

x100 x75

x50

2502 2002 1502 1002

502

Latest Forward P/E (49.9)

2 2013

2014

2015

2016

2017

2018

** Implied price index calculated using forward earnings times forward P/Es. Source: Standard & Poor's Corporation and I/B/E/S data by Refinitiv.

2019

2020

2021

2022

2

2023

2024

Figure 12.

3500

3100 ALPHABET (GOOGLE) FORWARD EARNINGS, & VALUATION

x30

3500 3100

2700

Price Index: Alphabet (Google) 11/05/21

x25

2700

2300

Blue Angels Implied Price Index**

1900

11/05/21

x20

2300

1900

x15

1500

1500

1100

1100

700

700

Latest Forward P/E (26.6)

300 2013

Implied P/E declined in early 2017 because options expense was included in consensus earnings going forward.

2014

2015

2016

2017

2018

2019

** Implied price index calculated using forward earnings times forward P/Es. Source: Standard & Poor's Corporation and I/B/E/S data by Refinitiv.

2020

2021

2022

300

2023

2024

Page 6 / November 5, 2021 / Industry Indicators: FANGs

Yardeni Research, Inc.



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