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Netflix "Chills" Ahead of Earnings: Time to Buy the Streaming Giant?
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Some of the best ideas are born by pure chance.
Entrepreneur and co-founder of Netflix Marc Randolph admittedly stumbled upon the thought of movie rentals by mail after dozens of strange ideas (including personalized shampoo) failed to spark enough interest.
In an unlikely way, his career in the mail-order department of a sheet music company (more than a decade earlier) shaped his experience in a brand new setting. Shifting to the present, Netflix has now become a textbook example of how a slight change in business delivery can revolutionize an entire industry.
It’s been more than 25 years since the DVD-by-mail company was founded. The transformation into a leading streaming provider and content creator is one that even Randolph couldn’t have imagined in his wildest dreams.
Netflix Stock Retreats Ahead of Q2 Earnings Announcement
After the closing bell tomorrow evening, streaming giant Netflix (NFLX - Free Report) is set to report second-quarter results. Analysts are expecting NFLX to deliver quarterly earnings of $4.70 per share, reflecting a 42.9% improvement relative to the same quarter in the prior year. Revenues of $9.53 billion would mark a 16.4% jump versus the year-ago period.
Image Source: Zacks Investment Research
A pioneer in the streaming space, Netflix has exceeded the earnings mark in three of the past four quarters. The company delivered a trailing four-quarter average earnings surprise of 9.3%.
A Zacks Rank #2 (Buy), Netflix is benefitting from its growing subscriber base and a crackdown on password-sharing. Its diversified portfolio, which is attributable to heavy investments in the production and distribution of localized and foreign-language content, has been driving growth prospects. At the end of the first quarter, Netflix boasted nearly 270 million paid subscribers globally.
In addition, the company has leaned on revenue initiatives such as its ad-supported tier. Ad-tier memberships increased 65% year-over-year during the first quarter, with ad plans now accounting for 40% of all Netflix sign-ups in markets where they’re offered. Recent price hikes on certain subscription plans have also helped boost the top line.
The stock’s leadership has clearly returned. NFLX shares were one of the first to turn the corner during the 2022 bear market, bottoming out well before the major indexes. The stock pushed back up against all-time highs earlier this month before a recent pullback. Still, NFLX stock has handily outperformed the market in 2024 with 32.3% return:
Image Source: StockCharts
What the Zacks Model Unveils
The Zacks Earnings ESP (Expected Surprise Prediction) seeks to find companies that have recently seen positive earnings estimate revision activity. The idea is that this recent information can serve as a more accurate predictor of the future, which can give investors a leg up during earnings season.
The technique has proven to be quite useful in finding positive surprises. In fact, when combining a Zacks Rank #3 or better with a positive Earnings ESP, stocks delivered a positive surprise 70% of the time according to our 10-year back test.
NFLX is a Zacks Rank #2 (Buy) and boasts a +0.35% Earnings ESP. Another beat may be in the cards when the company reports its Q2 results tomorrow evening.
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Netflix "Chills" Ahead of Earnings: Time to Buy the Streaming Giant?
Some of the best ideas are born by pure chance.
Entrepreneur and co-founder of Netflix Marc Randolph admittedly stumbled upon the thought of movie rentals by mail after dozens of strange ideas (including personalized shampoo) failed to spark enough interest.
In an unlikely way, his career in the mail-order department of a sheet music company (more than a decade earlier) shaped his experience in a brand new setting. Shifting to the present, Netflix has now become a textbook example of how a slight change in business delivery can revolutionize an entire industry.
It’s been more than 25 years since the DVD-by-mail company was founded. The transformation into a leading streaming provider and content creator is one that even Randolph couldn’t have imagined in his wildest dreams.
Netflix Stock Retreats Ahead of Q2 Earnings Announcement
After the closing bell tomorrow evening, streaming giant Netflix (NFLX - Free Report) is set to report second-quarter results. Analysts are expecting NFLX to deliver quarterly earnings of $4.70 per share, reflecting a 42.9% improvement relative to the same quarter in the prior year. Revenues of $9.53 billion would mark a 16.4% jump versus the year-ago period.
Image Source: Zacks Investment Research
A pioneer in the streaming space, Netflix has exceeded the earnings mark in three of the past four quarters. The company delivered a trailing four-quarter average earnings surprise of 9.3%.
A Zacks Rank #2 (Buy), Netflix is benefitting from its growing subscriber base and a crackdown on password-sharing. Its diversified portfolio, which is attributable to heavy investments in the production and distribution of localized and foreign-language content, has been driving growth prospects. At the end of the first quarter, Netflix boasted nearly 270 million paid subscribers globally.
In addition, the company has leaned on revenue initiatives such as its ad-supported tier. Ad-tier memberships increased 65% year-over-year during the first quarter, with ad plans now accounting for 40% of all Netflix sign-ups in markets where they’re offered. Recent price hikes on certain subscription plans have also helped boost the top line.
The stock’s leadership has clearly returned. NFLX shares were one of the first to turn the corner during the 2022 bear market, bottoming out well before the major indexes. The stock pushed back up against all-time highs earlier this month before a recent pullback. Still, NFLX stock has handily outperformed the market in 2024 with 32.3% return:
Image Source: StockCharts
What the Zacks Model Unveils
The Zacks Earnings ESP (Expected Surprise Prediction) seeks to find companies that have recently seen positive earnings estimate revision activity. The idea is that this recent information can serve as a more accurate predictor of the future, which can give investors a leg up during earnings season.
The technique has proven to be quite useful in finding positive surprises. In fact, when combining a Zacks Rank #3 or better with a positive Earnings ESP, stocks delivered a positive surprise 70% of the time according to our 10-year back test.
NFLX is a Zacks Rank #2 (Buy) and boasts a +0.35% Earnings ESP. Another beat may be in the cards when the company reports its Q2 results tomorrow evening.