Meta Platforms, Inc. (META)vs SMCI Holdings, Inc. (SMCI)

Quick verdict

Meta Platforms (META) and SMCI Holdings (SMCI) sit in different sectors and show contrasting financial profiles. META trades at a market cap of roughly $1.69tn versus SMCI's approximately $2.79tn, though SMCI carries no P/E multiple (peTtm and peFwd both 0) due to negative earnings, reflected in its net margin of -7.89% and ROE of -18.28%. META shows stronger profitability with an 81.94% gross margin, 41.21% operating margin and 33.22% ROE, alongside a PEG of 3.81. SMCI offers a 3.17% dividend yield versus META's 0.32%. Overall verdict scores favour META (4) over SMCI (2), with META tagged 'high-growth, high-quality' and SMCI tagged 'income, mature'. Momentum also favours META, up 13.88% over one year against SMCI's -1.45%.

2-year relative performance

At-a-glance comparison

Business model and revenue mix

META operates as a technology company in the Communication Services sector, within Internet Content & Information, focused on connecting people through its platforms following its 2021 rebrand from Facebook, Inc. SMCI is classified in the Healthcare sector under Drug Manufacturers, based on the supplied short description, though limited qualitative detail is provided beyond this sector tag. The two companies therefore operate in fundamentally different industries, with META's model centred on advertising and user engagement across social platforms, while SMCI's classification points to pharmaceutical manufacturing activity, though no further operational specifics are included in the data provided.

Valuation

META trades at a trailing P/E of 23.77 and forward P/E of 42.61, with a price-to-sales ratio of 7.85 and price-to-book of 6.91. Its PEG ratio of 3.81 suggests the forward multiple is elevated relative to its growth profile. SMCI shows no meaningful P/E (both trailing and forward at 0, likely reflecting negative or negligible earnings), a price-to-sales ratio of 19.57 – notably higher than META's – and a lower price-to-book of 2.94. EV/EBITDA is broadly similar between the two, at 15.43 for META and 15.52 for SMCI. Both verdicts assign valuation a grade of A. FCF yield differs sharply: 4.93% for META versus just 0.61% for SMCI.

Growth profile

META has delivered strong historic revenue growth, with a 3-year CAGR of 22.17% and 5-year CAGR of 24.18%. Its EPS trend is mixed, with a 3-year CAGR of -2.56% but a 5-year CAGR of 30.52%. SMCI's growth metrics are negative across the board: revenue CAGR of -4.30% (3-year) and -4.43% (5-year), alongside EPS CAGR of -5.59% (3-year) and -2.88% (5-year). The growth verdict grade of A applies to the comparison overall, though the underlying figures show META driving substantially stronger top-line and long-term earnings growth than SMCI, whose revenue and earnings have contracted over both measured periods.

Profitability and quality

META demonstrates high profitability, with gross margin of 81.94%, operating margin of 41.21%, net margin of 32.84%, ROE of 33.22% and ROIC of 19.96%. SMCI's profitability metrics are negative: operating margin of -12.96%, net margin of -7.89%, ROE of -18.28% and ROIC of -5.07%, though gross margin remains positive at 33.70%. The quality verdict grade of A reflects META's stronger fundamentals in this comparison. These figures indicate META converts a substantially larger share of revenue into profit, while SMCI's supplied figures point to current operating losses at the reported net and operating levels.

Balance-sheet risk

META holds cash of approximately $15.91bn against total debt of $10.78bn, with net debt/EBITDA of 2.55x, a current ratio of 2.35 and interest coverage of 12.81x. SMCI reports larger cash reserves of roughly $34.99bn against total debt of $29.82bn, resulting in a negative net debt/EBITDA of -0.86x, a higher current ratio of 2.88, and stronger interest coverage of 43.56x. Both companies receive a balance sheet verdict grade of B. While SMCI shows a net cash position and higher liquidity ratios, its negative EBITDA context should be considered when interpreting the net debt/EBITDA figure.

Price performance and shareholder returns

META has returned 6.4% year-to-date, 13.88% over one year, an annualised 47.39% over three years, and an annualised 18.72% over five years, with a maximum 5-year drawdown of -28.27%. SMCI has returned 23.16% year-to-date but -1.45% over one year, an annualised 0.78% over three years, and a stronger annualised 32.67% over five years, with a maximum drawdown of -26.29%. META's beta of 1.246 is lower than SMCI's 1.65, indicating relatively higher historical volatility for SMCI. The momentum verdict grade of A favours META, consistent with its more positive recent one- and three-year returns.

Which stock fits which investor

Based on the supplied verdicts, META is identified as best suited for investors prioritising value, growth, and quality, aligning with its grades of A across valuation, growth, quality, and momentum categories, and an overall score of 4. SMCI is identified as best suited for income-focused investors, reflecting its higher dividend yield of 3.17% versus META's 0.32%, despite an overall score of 2 and a B grade in balance sheet and income categories. Investors weighing profitability, growth consistency and momentum may find META's metrics more supportive of those objectives, while SMCI's dividend yield and balance sheet liquidity may appeal to income-oriented considerations, per the style tags 'high-growth, high-quality' for META and 'income, mature' for SMCI.

• Value: META
• Growth: META
• Income: SMCI
• Quality: META

Frequently asked questions

Which company has stronger profitability, META or SMCI?

META shows stronger profitability across all supplied metrics, with a gross margin of 81.94%, operating margin of 41.21%, net margin of 32.84%, ROE of 33.22% and ROIC of 19.96%. SMCI's figures are negative for operating margin (-12.96%), net margin (-7.89%), ROE (-18.28%) and ROIC (-5.07%), though its gross margin is a positive 33.70%.

How do META and SMCI compare on valuation?

META has a trailing P/E of 23.77, forward P/E of 42.61, and price-to-sales of 7.85. SMCI shows no P/E (0 for both trailing and forward, reflecting negative/negligible earnings) and a higher price-to-sales ratio of 19.57. Both carry a valuation verdict grade of A, and EV/EBITDA is similar at 15.43 (META) versus 15.52 (SMCI).

Which stock has performed better recently?

Over one year, META returned 13.88% compared to SMCI's -1.45%. Year-to-date, SMCI has returned 23.16% versus META's 6.4%. Over three years annualised, META returned 47.39% against SMCI's 0.78%, while over five years annualised, SMCI's 32.67% slightly exceeds META's 18.72%.

Does either company pay a dividend?

SMCI offers a dividend yield of 3.17% with a payout ratio of 22.96%, while META offers a smaller dividend yield of 0.32% with a payout ratio of 7.57%. META also shows a higher buyback yield of 1.68% compared to SMCI's 2.16%.

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