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Shares of Netflix (NFLX - Free Report) surged over 3.3% on Thursday as part of a nearly market-wide resurgence that saw investors dive back into tech stocks. This could also indicate the start of continued momentum in the lead-up to the streaming giant’s upcoming Q1 financial report.
Netflix did fall victim to broader concerns surrounding tech stocks recently. However, shares of Netflix only dipped about 2% over the last month, while other stocks, such as Micron (MU - Free Report) and Facebook , got hammered.
A recent CNBC survey found that nearly 60% of American use some type of streaming service, with Netflix the most widely used at 51%, while Amazon (AMZN - Free Report) Prime came in second at 33%. Netflix also plans to spend $8 billion on content in 2018 as it enhances its lineup of original programming to better compete against Amazon, Hulu, HBO, and soon enough Disney (DIS - Free Report) .
With that said, let’s take a closer look at some of Netflix’s current estimates to understand if investors should consider buying the stock ahead of its upcoming first-quarter earnings report.
Latest Outlook and Valuation
Within the last 60 days, Netflix has earned two earnings estimate revisions, with 100% agreement to the upside. These revisions lifted Netflix’s consensus earnings estimate by 2 cents.
Our current Zacks Consensus Estimates are calling for Netflix’s Q1 revenues to soar by 39.9% to hit $3.69 billion. Meanwhile, Netflix’s Q1 earnings are expected to pop by 57.5% to reach $0.63 per share.
Heading into its soon-to-be-reported quarter, NFLX is trading with a Forward P/E of 92.2, which marks a massive premium to its industry’s average. But most Netflix investors aren’t worried about this sky-high valuation as they see Netflix as a growth stock that is worth its substantial premium.
With that said, investors should note that Netflix is currently trading at a drastically lower earnings multiple than it was just two weeks ago when its Forward P/E rested at 105.6, so its recent share price dip and improving earnings outlook are having some effect here.
User Guidance
On its fourth-quarter earnings call, Netflix noted that it expects to add 6.35 million new users in the first quarter, which would be up substantially from the 5 million subscribers it added in the year-ago period.
Netflix expects to add 1.45 million users in the U.S. and gain 4.9 million new international subscribers.
Price Performance and Surprise History
Another important thing to consider ahead of Netflix’s report is the company’s history of earnings surprises and the effect that these surprises have had on share prices.
We can see that Netflix boasts a relatively strong earnings surprise history, yet its bottom-line results have not always immediately translated into positive momentum for the stock. Furthermore, we can see that Netflix’s stock price soared directly ahead of its earnings results in two of the last three periods—one of which saw Netflix fall short of estimates.
Past performance is not always an indicator of future success, but we can see that investors have pumped up Netflix ahead of earnings a few times, with mixed post-earnings results.
Nonetheless, Netflix’s top and bottom lines are projected to soar in the first quarter and the company’s valuation looks more attractive than it did in mid-March. Netflix is also currently a Zacks Rank #2 (Buy).
Netflix is expected to report its first quarter financial results on April, 16.
Investor Alert: Breakthroughs Pending
A medical advance is now at the flashpoint between theory and realization. Billions of dollars in research have poured into it. Companies are already generating substantial revenue, and even more wondrous products are in the pipeline.
Cures for a variety of deadly diseases are in sight, and so are big potential profits for early investors. Zacks names 5 stocks to buy now.
Image: Bigstock
An Early Preview of Netflix's Earnings Outlook
Shares of Netflix (NFLX - Free Report) surged over 3.3% on Thursday as part of a nearly market-wide resurgence that saw investors dive back into tech stocks. This could also indicate the start of continued momentum in the lead-up to the streaming giant’s upcoming Q1 financial report.
Netflix did fall victim to broader concerns surrounding tech stocks recently. However, shares of Netflix only dipped about 2% over the last month, while other stocks, such as Micron (MU - Free Report) and Facebook , got hammered.
A recent CNBC survey found that nearly 60% of American use some type of streaming service, with Netflix the most widely used at 51%, while Amazon (AMZN - Free Report) Prime came in second at 33%. Netflix also plans to spend $8 billion on content in 2018 as it enhances its lineup of original programming to better compete against Amazon, Hulu, HBO, and soon enough Disney (DIS - Free Report) .
With that said, let’s take a closer look at some of Netflix’s current estimates to understand if investors should consider buying the stock ahead of its upcoming first-quarter earnings report.
Latest Outlook and Valuation
Within the last 60 days, Netflix has earned two earnings estimate revisions, with 100% agreement to the upside. These revisions lifted Netflix’s consensus earnings estimate by 2 cents.
Our current Zacks Consensus Estimates are calling for Netflix’s Q1 revenues to soar by 39.9% to hit $3.69 billion. Meanwhile, Netflix’s Q1 earnings are expected to pop by 57.5% to reach $0.63 per share.
Heading into its soon-to-be-reported quarter, NFLX is trading with a Forward P/E of 92.2, which marks a massive premium to its industry’s average. But most Netflix investors aren’t worried about this sky-high valuation as they see Netflix as a growth stock that is worth its substantial premium.
With that said, investors should note that Netflix is currently trading at a drastically lower earnings multiple than it was just two weeks ago when its Forward P/E rested at 105.6, so its recent share price dip and improving earnings outlook are having some effect here.
User Guidance
On its fourth-quarter earnings call, Netflix noted that it expects to add 6.35 million new users in the first quarter, which would be up substantially from the 5 million subscribers it added in the year-ago period.
Netflix expects to add 1.45 million users in the U.S. and gain 4.9 million new international subscribers.
Price Performance and Surprise History
Another important thing to consider ahead of Netflix’s report is the company’s history of earnings surprises and the effect that these surprises have had on share prices.
Netflix, Inc. Price, Consensus and EPS Surprise
Netflix, Inc. Price, Consensus and EPS Surprise | Netflix, Inc. Quote
We can see that Netflix boasts a relatively strong earnings surprise history, yet its bottom-line results have not always immediately translated into positive momentum for the stock. Furthermore, we can see that Netflix’s stock price soared directly ahead of its earnings results in two of the last three periods—one of which saw Netflix fall short of estimates.
Past performance is not always an indicator of future success, but we can see that investors have pumped up Netflix ahead of earnings a few times, with mixed post-earnings results.
Nonetheless, Netflix’s top and bottom lines are projected to soar in the first quarter and the company’s valuation looks more attractive than it did in mid-March. Netflix is also currently a Zacks Rank #2 (Buy).
Netflix is expected to report its first quarter financial results on April, 16.
Investor Alert: Breakthroughs Pending
A medical advance is now at the flashpoint between theory and realization. Billions of dollars in research have poured into it. Companies are already generating substantial revenue, and even more wondrous products are in the pipeline.
Cures for a variety of deadly diseases are in sight, and so are big potential profits for early investors. Zacks names 5 stocks to buy now.
Click here to see them >>