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Netflix (NFLX) Stock Climbs Ahead of Earnings: Should You Buy?
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Shares of Netflix (NFLX - Free Report) gained as much as 2.77% in morning trading Monday as investors prepare for the video streaming giant’s first-quarter earnings release this afternoon. The excitement for Netflix’s Q1 report is palpable, but is now a good time to make an earnings play on this stock?
What to Expect
In the fourth quarter, Netflix surpassed our consensus estimates for revenue and earnings, and total paid membership grew to about 93.8 million. The streaming platform saw domestic net additions of 1.93 million, which outpaced company guidance by nearly half a million. Total net income of $154 million was also well-above guidance.
So what can we expect from Netflix this quarter? Well, the company guided for earnings of 37 cents per share, and after analysts’ earnings estimates caught up to those projections, the Zacks Consensus Estimate eventually reached 38 cents per share.
Our consensus sales estimate currently calls for revenue of $2.641 billion. These figures would represent growth of 526% and 35%, respectively.
Nevertheless, the most recent estimates have not helped call an earnings beat. As it stands, Netflix currently has an Earnings ESP of 0%, which—alongside its Zacks Rank #3 (Hold)—makes surprise prediction difficult.
However, Netflix will most likely flirt with the monumental 100 million subscribers threshold, meaning that this report could be a historic moment for the company (also read: 3 Key Predictions for Netflix's Q1 Earnings).
Bottom Line
While the company may break out the champagne to celebrate hitting 100 million subscribers, our proprietary method for predicting earnings beats does not reveal a clear play here. This could deter some investors, but the promise of substantial EPS and revenue growth is still there.
With the stock moving higher in morning trading hours, it’s clear that investors are willing to buy this ahead of earnings. Should you? It all depends on how you prefer to trade.
The Best & Worst of Zacks
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Netflix (NFLX) Stock Climbs Ahead of Earnings: Should You Buy?
Shares of Netflix (NFLX - Free Report) gained as much as 2.77% in morning trading Monday as investors prepare for the video streaming giant’s first-quarter earnings release this afternoon. The excitement for Netflix’s Q1 report is palpable, but is now a good time to make an earnings play on this stock?
What to Expect
In the fourth quarter, Netflix surpassed our consensus estimates for revenue and earnings, and total paid membership grew to about 93.8 million. The streaming platform saw domestic net additions of 1.93 million, which outpaced company guidance by nearly half a million. Total net income of $154 million was also well-above guidance.
So what can we expect from Netflix this quarter? Well, the company guided for earnings of 37 cents per share, and after analysts’ earnings estimates caught up to those projections, the Zacks Consensus Estimate eventually reached 38 cents per share.
Our consensus sales estimate currently calls for revenue of $2.641 billion. These figures would represent growth of 526% and 35%, respectively.
Nevertheless, the most recent estimates have not helped call an earnings beat. As it stands, Netflix currently has an Earnings ESP of 0%, which—alongside its Zacks Rank #3 (Hold)—makes surprise prediction difficult.
However, Netflix will most likely flirt with the monumental 100 million subscribers threshold, meaning that this report could be a historic moment for the company (also read: 3 Key Predictions for Netflix's Q1 Earnings).
Bottom Line
While the company may break out the champagne to celebrate hitting 100 million subscribers, our proprietary method for predicting earnings beats does not reveal a clear play here. This could deter some investors, but the promise of substantial EPS and revenue growth is still there.
With the stock moving higher in morning trading hours, it’s clear that investors are willing to buy this ahead of earnings. Should you? It all depends on how you prefer to trade.
The Best & Worst of Zacks
Today you are invited to download the full, up-to-the-minute list of 220 Zacks Rank #1 "Strong Buys" free of charge. From 1988 through 2015 this list has averaged a stellar gain of +25% per year. Plus, you may download 220 Zacks Rank #5 "Strong Sells." Even though this list holds many stocks that seem to be solid, it has historically performed 6X worse than the market. See these critical buys and sells free >>