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Time to Buy Netflix (NFLX) Stock on the Dip Heading into 2019?
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Shares of Netflix (NFLX - Free Report) have plummeted 34% in the last six months. Now, the question for investors is should they consider buying NFLX stock heading into 2019 with the streaming power set to compete against not only Amazon (AMZN - Free Report) , but soon enough Disney (DIS - Free Report) and Apple (AAPL - Free Report) ?
Company Overview
Netflix helped create and revolutionize the on-demand streaming video model that has sent the traditional TV market into a nosedive and forced giants like Disney to recalibrate. Netflix has also grown from aggregator into an original content juggernaut in roughly five years. In fact, the firm ended HBO’s (T - Free Report) 17-year run on the top of the Emmy nomination list this year.
The Los Gatos, California-headquartered firm’s ability to create much-watch TV and movie content will become vital as the streaming space becomes more crowded. Plus, Amazon, Disney, and Apple all have much more money to pour into content.
Netflix has committed to roll out everything from international and indie-style offerings to big-budget projects featuring A-list Hollywood stars. With that said, Netflix is poised to spend $13.4 billion on TV shows and movies in 2018, according to Goldman Sachs (GS - Free Report) .
The streaming firm’s stock took a big hit when it fell well short of its own Q2 subscriber growth estimates. But Netflix bounced back in Q3 when it ended the quarter with a total of 137.1 million subscribers worldwide. This topped Netflix’s 135.14 million estimate and marked a roughly 25% jump from the third-quarter of 2017.
Price
Moving on, Netflix stock popped 2.70% to touch $278.25 per share through mid-morning trading Wednesday. Despite this jump, NFLX stock sits roughly 34% below its 52-week high of $423.21 per share. With that said, we can see that Netflix stock is still up huge over the last five years.
Outlook
Looking ahead, Netflix’s fourth-quarter revenues are projected to jump 28% to reach $4.21 billion, based on our current Zacks Consensus Estimate. Meanwhile, the company’s fiscal 2018 revenues are expected to reach $15.81 billion, which would mark a 35.2% jump from 2017. Jumping even further ahead, Netflix’s fiscal 2019 revenues are projected to climb 25.7% above our current 2018 estimate.
At the bottom end of the income statement, the company’s adjusted Q4 earnings are projected to sink 39% from the year-ago period to touch $0.25 a share. Despite this projected year over year decline, the firm’s adjusted full-year earnings are projected to skyrocket over 110%. Plus, the company’s fiscal 2019 EPS figure is expected to come in 55% higher than our current-year estimate.
Clearly, Netflix looks poised to continue to become a more profitable company, which should be good news for investors since earnings growth is one of the best indicators of positive stock price moment over the long haul.
Bottom Line
Netflix expects to add a total 9.4 million subscribers in Q4 that would help bring its total to 146.5 million worldwide. However, the streaming company said in October that it is set to issue $2 billion in new debt. This will see Netflix reach roughly $10 billion in long-term debt, which might scare investors as it is forced to spend billions to compete against foes with much larger pocketbooks.
With that said, we are headed to what looks almost certain to be an entertainment future dominated entirely by streaming, and Netflix currently boasts pole position in the race. Plus, NFLX is currently trading right near its year-long low at 67.1X 12-month Zacks Consensus EPS estimates. This comes in well above the S&P 500’s 15.3X, but marks a massive discount compared to its 12-month high of 162X and its 94X median.
In the end, Netflix stock rests 34% below its 52-week high and its valuation picture has improved. Coupled with its impressive top and bottom-line growth projections, NFLX stock looks like it might be worth buying in anticipation of a possible 2019 comeback.
But with Amazon, Disney, Apple, and others to compete against, Netflix is in for a major streaming battle for years to come. And let’s not forget that unlike Disney and Amazon, Netflix doesn’t have any plans to entice subscribers with other offerings such as live sports.
Wall Street’s Next Amazon
Zacks EVP Kevin Matras believes this familiar stock has only just begun its climb to become one of the greatest investments of all time. It’s a once-in-a-generation opportunity to invest in pure genius.
Image: Bigstock
Time to Buy Netflix (NFLX) Stock on the Dip Heading into 2019?
Shares of Netflix (NFLX - Free Report) have plummeted 34% in the last six months. Now, the question for investors is should they consider buying NFLX stock heading into 2019 with the streaming power set to compete against not only Amazon (AMZN - Free Report) , but soon enough Disney (DIS - Free Report) and Apple (AAPL - Free Report) ?
Company Overview
Netflix helped create and revolutionize the on-demand streaming video model that has sent the traditional TV market into a nosedive and forced giants like Disney to recalibrate. Netflix has also grown from aggregator into an original content juggernaut in roughly five years. In fact, the firm ended HBO’s (T - Free Report) 17-year run on the top of the Emmy nomination list this year.
The Los Gatos, California-headquartered firm’s ability to create much-watch TV and movie content will become vital as the streaming space becomes more crowded. Plus, Amazon, Disney, and Apple all have much more money to pour into content.
Netflix has committed to roll out everything from international and indie-style offerings to big-budget projects featuring A-list Hollywood stars. With that said, Netflix is poised to spend $13.4 billion on TV shows and movies in 2018, according to Goldman Sachs (GS - Free Report) .
The streaming firm’s stock took a big hit when it fell well short of its own Q2 subscriber growth estimates. But Netflix bounced back in Q3 when it ended the quarter with a total of 137.1 million subscribers worldwide. This topped Netflix’s 135.14 million estimate and marked a roughly 25% jump from the third-quarter of 2017.
Price
Moving on, Netflix stock popped 2.70% to touch $278.25 per share through mid-morning trading Wednesday. Despite this jump, NFLX stock sits roughly 34% below its 52-week high of $423.21 per share. With that said, we can see that Netflix stock is still up huge over the last five years.
Outlook
Looking ahead, Netflix’s fourth-quarter revenues are projected to jump 28% to reach $4.21 billion, based on our current Zacks Consensus Estimate. Meanwhile, the company’s fiscal 2018 revenues are expected to reach $15.81 billion, which would mark a 35.2% jump from 2017. Jumping even further ahead, Netflix’s fiscal 2019 revenues are projected to climb 25.7% above our current 2018 estimate.
At the bottom end of the income statement, the company’s adjusted Q4 earnings are projected to sink 39% from the year-ago period to touch $0.25 a share. Despite this projected year over year decline, the firm’s adjusted full-year earnings are projected to skyrocket over 110%. Plus, the company’s fiscal 2019 EPS figure is expected to come in 55% higher than our current-year estimate.
Clearly, Netflix looks poised to continue to become a more profitable company, which should be good news for investors since earnings growth is one of the best indicators of positive stock price moment over the long haul.
Bottom Line
Netflix expects to add a total 9.4 million subscribers in Q4 that would help bring its total to 146.5 million worldwide. However, the streaming company said in October that it is set to issue $2 billion in new debt. This will see Netflix reach roughly $10 billion in long-term debt, which might scare investors as it is forced to spend billions to compete against foes with much larger pocketbooks.
With that said, we are headed to what looks almost certain to be an entertainment future dominated entirely by streaming, and Netflix currently boasts pole position in the race. Plus, NFLX is currently trading right near its year-long low at 67.1X 12-month Zacks Consensus EPS estimates. This comes in well above the S&P 500’s 15.3X, but marks a massive discount compared to its 12-month high of 162X and its 94X median.
In the end, Netflix stock rests 34% below its 52-week high and its valuation picture has improved. Coupled with its impressive top and bottom-line growth projections, NFLX stock looks like it might be worth buying in anticipation of a possible 2019 comeback.
But with Amazon, Disney, Apple, and others to compete against, Netflix is in for a major streaming battle for years to come. And let’s not forget that unlike Disney and Amazon, Netflix doesn’t have any plans to entice subscribers with other offerings such as live sports.
Wall Street’s Next Amazon
Zacks EVP Kevin Matras believes this familiar stock has only just begun its climb to become one of the greatest investments of all time. It’s a once-in-a-generation opportunity to invest in pure genius.
Click for details >>