(Note: The author of this fundamental analysis is a financial writer and portfolio manager.)

Facebook Inc. (FB) shares stumbled on January 12 after CEO Mark Zuckerberg announced plans to revamp FB's news feed algorithm to favor posts from friends and family over those from publishers and companies. 

The stock market did not take kindly to the idea that posts from businesses and advertisements might be viewed less because it means potentially less revenue. But with Facebook currently trading around $179, the stock price looks cheap based on earnings estimates and potential for future growth, with the potential to rise by about 15 percent. 

The news of Facebook reshuffling its news feed algorithm to prioritize "meaningful social interactions" versus "relevant content" seemed to shock the market, causing shares to decline by nearly 5 percent on January 12. But this is not the first time the company has made changes to its news feed algorithm.

On June 29, 2016, the company announced it was revamping its news feed to put friends and family first. Does that sound familiar? How or if the latest changes will impact Facebook's future revenue and profitability is unknown at this point. 

May Rise To $205

At its current earnings valuation, the stock is trading well below its 2017 forward multiple of roughly 27 times. And even if that multiple should climb to 25 times in 2018, the stock could be worth as much as $205. That is, of course, IF there no meaningful upgrades or downgrades to analyst estimates. 

FB PE Ratio (Forward 1y) Chart

No Adjustments Yet

To this point, analysts have not adjusted revenue estimates for Facebook, and are looking for revenue to grow by roughly 25 percent to $67.10 billion in 2019, while earnings are expected to increase by about 22 percent.

But the incredible part of this story is that Facebook trades at just 21.8 times 2019 earning estimates of $8.22. When adjusted for growth, this gives the social media giant a one-year forward PEG ratio of just about 1.

FB Revenue Estimates for 2 Fiscal Years Ahead Chart

Technically Solid

Even from a technical standpoint, shares of Facebook have held up well. Despite the negative news, the stock has managed to stay above support around $178, keeping its solid uptrend. (See also: Why Facebook, Netflix Are Best FAANG Stocks In January.)

The company is expected to report its fourth-quarter and full-year results on January 31. It is at that point that investors will learn of the potential impact, if any, of Facebook's latest change to its news feed algorithm. 

Michael Kramer is the Founder of Mott Capital Management LLC, a registered investment adviser, and the manager of the company's actively managed, long-only Thematic Growth Portfolio. Kramer typically buys and holds stocks for a duration of three to five years. Click here for Kramer's bio and his portfolio's holdingsInformation presented is for educational purposes only and does not intend to make an offer or solicitation for the sale or purchase of any specific securities, investments, or investment strategies. Investments involve risk and unless otherwise stated, are not guaranteed. Be sure to first consult with a qualified financial adviser and/or tax professional before implementing any strategy discussed herein. Upon request, the advisor will provide a list of all recommendations made during the past twelve months. Past performance is not indicative of future performance.