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Bull of the Day: Netflix (NFLX)

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A big winner early on in this earnings season is clearly Netflix (NFLX - Free Report) . One of the original four members of the band “FANG” Netflix has re-established itself as one of the premier tech names in the market place. While your binge-watching sprees likely have little to do with the move, you can attribute a chunk of the move to people’s affinity for Netflix originals. Seeing the stock as a Zacks Rank #1 (Strong Buy) I couldn’t resist naming it today’s Bull of the Day.

For those of you who have been living under a rock the last several years, Netflix,an Internet television network, engages in the Internet delivery of television (TV) shows and movies on various Internet-connected screens. It operates in three segments: Domestic Streaming, International Streaming, and Domestic DVD. The company offers TV shows and movies, including original series, documentaries, and feature films. It offers members with the ability to receive streaming content through a host of Internet-connected screens, including TVs, digital video players, television set-top boxes, and mobile devices. The company also provides DVDs-by-mail membership services.

Streaming obviously makes up a sizable chunk of Netflix’s revenue. Can you believe there are still people loading up DVDs and sending them off in the mail? (UPDATE: My sister did in fact finally upgrade to streaming. Yes, her TV is an awesome new flat screen but she has TiVo…) Netflix subscribers love the exclusive content from Netflix Originals.

Revenue growth for the upcoming quarter is slated to come in at 25.55%, while the next quarter is looking like 21.37% growth. This pegs current year revenue growth at 27.8% and next year’s at 20.12%. EPS growth is likely to be much stronger. Based on current EPS estimates from analysts, Netflix is looking at 83.89% EPS growth for next quarter with the current year number rounding out at 144.87%. Next year analysts are expecting EPS 85.36% higher than this year.

Netflix was up big on earnings, rallying over 13% to finish the day close to $185. Volume was huge the day after earnings with over 35 million shares traded. Heading into the report, Netflix shares had rallied from $144.25 to $161.70 in eight trading days. Shares are now well above the 50-day moving average which sits down under $160 and has provided bullish trend line support for Netflix since last year’s lows under $80. Should subscriber growth continue for Netflix, we may never see the stock under $140 again.

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