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Using Facebook's (NASDAQ:FB) March 2012 results, I have compared four valuation metrics for Facebook vs. Google (NASDAQ:GOOG) at similar points in time, assuming that Facebook prices its IPO at $35. This creates $91 billion in market cap based on 2.6 billion shares, taking into account all the options and restricted stock that is outlined in its SEC filing.

The four valuation metrics are Trailing and Forward four quarters of Revenue vs. Market Cap and Trailing and Forward four quarters of Operating Income vs. Market Cap. I matched Facebook's March 2012 results vs. Google's equivalent quarter and depending on the metric Google's equivalent quarter was in 2005. I then project Facebook's results through 2014 and estimate what its valuation metrics would be compared to Google's at equivalent times.

It can be difficult to project revenue and earnings one to two quarters in the future for mature companies, so it is even harder to estimate results for new, quickly growing companies over a two to three year timeframe. I have used my base case analysis for Facebook's results through 2014 that I published last week as it seems to be the most appropriate one to use for comparison. Therefore, keep in mind that Facebook could generate financial results above what I am using in this analysis (or could also be lower).

Depending on which valuation metric you look at, in one case Facebook's is higher than Google's (trailing four quarter revenue vs. market cap) and in two it is lower (forward four quarter revenue vs. market cap and forward four quarter operating income vs. market cap).

While Google's stock did very well in three of the four analysis timeframes in all four analyses, Facebook's growth rates are significantly lower than Google's, which should mean that Facebook's valuation ratios should be lower than Google's.

The overall result is that I believe Facebook is pretty much fully valued at $35. However, it would not be surprising at all to see its shares have a significant pop when it first opens for trading due to high demand (especially from retail investors). I am concerned that over a period of time (could be days, weeks or months) it will experience a declining stock price similar to what has happened to Groupon (NASDAQ:GRPN), Pandora (NYSE:P) and Zynga (NASDAQ:ZNGA).

There is the possibility that Facebook will be able to monetize its 900 million user base as well as Google, but given the lower and slowing growth rates, I believe that Facebook will post results that are below what Google did in the 2006 to 2008 timeframe. With a market cap approaching $100 billion, I believe it has a very high bar to exceed to provide meaningful stock price appreciation (except for a pop, given the high demand for the IPO).

Four valuation comparisons to Google

Facebook's four quarter Trailing Revenue of $4.038 billion in the March 2012 quarter compares to Google's $4.024 billion which it had generated in its December 2005 quarter. Facebook's market cap to revenue ratio of 23x is lower than Google's 31x, but note that Google's dropped substantially over the next three years to 8x and had significantly higher revenue growth (43% in the third year) than what I project for Facebook (25%).

Total

Revenue Trailing 4 Qtrs.

March '12

Dec. '12

Dec. '13

Dec. '14

Growth

Facebook ($ mil)

$4,038

$5,108

$6,600

$8,275

105%

Y/Y growth

71%

38%

29%

25%

Mkt Cap

$91

$91

$94

$97

6%

Mkt Cap to Revenue

23

18

14

12

Total

Revenue Trailing 4 Qtrs.

Dec. '05

Sept. '06

Sept. '07

Sept. '08

Growth

Google ($ mil)

$4,024

$6,356

$10,503

$15,028

273%

Y/Y growth

105%

88%

65%

43%

Mkt Cap

$126

$125

$180

$127

1%

Mkt Cap to Revenue

31

20

17

8

Facebook's four quarter Forward Revenue of $5.45 billion in the March 2012 quarter compares to Google's $5.54 billion which it generated in its June 2005 quarter. Facebook's market cap to revenue ratio of 17x is lower than Google's 23x and stays lower than Google's over a two year timeframe (11x vs. 14x). However, Google's growth rates are higher (54% in the second year vs. 25% for Facebook), which should mean that Facebook's valuation metric should be lower.

Total

Revenue Forward 4 Qtrs.

March '12

Dec. '12

Dec. '13

Growth

Facebook ($ mil)

$5,450

$6,600

$8,275

52%

Y/Y growth

35%

29%

25%

Mkt Cap

$91

$91

$94

2%

Mkt Cap to Revenue

17

14

11

Total

Revenue Forward 4 Qtrs.

June '05

March '06

March '07

Growth

Google ($ mil)

$5,540

$8,304

$12,821

131%

Y/Y growth

95%

74%

54%

Mkt Cap

$126

$125

$180

42%

Mkt Cap to Revenue

23

15

14

When compared on Trailing four quarters of Operating Income, Facebook's valuation metrics are similar to Google's (44x vs. 47x currently moving down to 24x in three years), however, again the theme of lower growth rates is present. Facebook generated just over $2 billion in operating income in the previous four quarters compared to Google's just under $2 billion. However, Facebook's operating income only doubles over a three year timeframe (97%) but Google's increases by two and a half times (252%).

Total

Oper. Inc. Trailing 4Q

March '12

Dec. '12

Dec. '13

Dec. '14

Growth

Facebook ($ mil)

$2,063

$2,440

$3,234

$4,055

97%

Y/Y growth

61%

24%

33%

25%

Mkt Cap

$91

$91

$94

$97

6%

Mkt Cap to Oper. Inc.

44

37

29

24

Total

Oper. Inc. Trailing 4Q

Sept. '05

June '06

June '07

June '08

Growth

Google ($ mil)

$1,953

$3,105

$4,977

$6,880

252%

Y/Y growth

110%

87%

60%

38%

Mkt Cap

$92

$130

$165

$167

83%

Mkt Cap to Oper. Inc.

47

42

33

24

Facebook is projected to generate over $2.6 billion in Operating Income starting in its June 2012 quarter for the next year, which compares to Google's $2.7 billion which started in its June 2005 quarter. While in two years Facebook's market cap to operating income metric of 23x is lower than Google's 28x, again Facebook's growth is significantly lower than Google's (25% vs. 47%).

Total

Oper. Income Forward 4 Qtrs.

March '12

Dec. '12

Dec. '13

Growth

Facebook ($ mil)

$2,642

$3,234

$4,055

53%

Y/Y growth

28%

33%

25%

Mkt Cap

$91

$91

$94

2%

Mkt Cap to Oper. Income

35

28

23

Total

Oper. Income Forward 4 Qtrs.

March '05

Dec. '05

Dec. '06

Growth

Google ($ mil)

$2,704

$4,038

$5,953

120%

Y/Y growth

96%

75%

47%

Mkt Cap

$92

$130

$165

80%

Mkt Cap to Oper. Income

34

32

28

Source: Facebook Vs. Google Valuation Analysis

Additional disclosure: Disclaimer: Always consult your financial advisor before investing in a specific stock. In no way does this article constitute a buy or sell recommendation on any particular stock. Of course, never invest money that you can not afford to lose, as any investment in securities is a risky investment.