Netflix, Inc. (NASDAQGS:NFLX) is scheduled to report Q4 earnings results on January 21, 2020. The earnings call is scheduled for the same day at 3:00 PM PT.
The company is expected to report earnings of $0.51/share on revenue of $5.442 billion after markets close for trading. The consensus earnings per share (EPS) of $0.51/share is based on a poll of 35 analysts and represents a growth of 70.0% over the same quarter last year when the company reported earnings of $0.30/share.
The revenue forecast of $5.442 billion based on a poll of 34 analysts implies a year-over-year (YoY) growth of 30.0%. Last year the company reported $4.187 billion in revenue for the quarter.
| Metric | Expected | Prior Year | YoY Change |
|---|---|---|---|
| Revenue | $5,442.00 | $4,186.84 | 30.0% |
| EPS | $0.51 | $0.30 | 70.0% |
In addition to the headline numbers, analysts will also be watching for positive trends in NFLX’s gross margins. The company’s management has historically been able to deliver improving gross margins in conjunction with rapid revenue growth as depicted below. Netflix’s massive subscriber base gives the company a competitive advantage in determining the type of content it needs to invest in continue to acquire and retain customers.
Source: Finbox
The company does face a high level of competition from formidable competitors like Disney and Apple that are now heavily investing in the video streaming market. The added competition suggests Netflix will continue to aggressively invest in original content, operate with negative cash from operations, and finance the cash shortfall by issuing debt. Netflix’s total debt has increased in each of the last three fiscal years from 3.364 billion in 2016 to 10.36 billion in 2018 and currently stands at approximately $13.5 billion.
Earnings Call Trends
Historically, management has exceeded analyst expectations 7 out of the last 8 tracked quarters, and met expectations 1 quarter.
What are your expectations from Netflix for earnings this quarter? Let us know in the comments!
| Quarter | Expected | Reported | Surprise | Result |
|---|---|---|---|---|
| Q3, 2019 | $1.04 | $1.47 | 41.3% | Beat |
| Q2, 2019 | $0.55 | $0.60 | 9.1% | Beat |
| Q1, 2019 | $0.57 | $0.76 | 33.3% | Beat |
| Q4, 2018 | $0.23 | $0.30 | 30.4% | Beat |
| Q3, 2018 | $0.68 | $0.89 | 30.9% | Beat |
| Q2, 2018 | $0.80 | $0.85 | 6.9% | Beat |
| Q1, 2018 | $0.63 | $0.64 | 1.6% | Beat |
| Q4, 2017 | $0.41 | $0.41 | 0.0% | Meet |
In the following table, we summarize the company’s stock price movements after earnings releases. The “Price Day Prior” column shows the closing stock price on the day before the earnings report, and the “Price Next Day” column shows the stock price at the end of the trading day after the earnings report. After the last earnings report for the period ending September 30, 2019, the stock price reacted by increasing by 3.2%.
| Report Date | Price Day Prior | Price Next Day | Change % | Result |
|---|---|---|---|---|
| 2019-10-16 | $284.25 | $293.35 | 3.2% | Increase |
| 2019-07-17 | $365.99 | $325.21 | -11.1% | Decline |
| 2019-04-16 | $348.87 | $354.74 | 1.7% | Increase |
| 2019-01-17 | $351.39 | $339.10 | -3.5% | Decline |
Fundamentals And Technical Analysis
Netflix is currently trading at $339.67/share, up 0.3% for the day. The company is trading at approximately 88.0% of its 52-week high of $385.99/share. The company’s stock price is up 15.8% since the last earnings report and up 0.2% over the previous week. The company’s 14 Day Relative Price Index (RSI) of 60.48 suggests the company is trading in technically neutral territory. The RSI is considered overbought when above 70 and oversold when below 30.
Source: Finbox The current share price implies a price-to-earnings (P/E) multiple of 105.3x and a forward P/E multiple of 98.5x.
Netflix’s current share price also implies a price-to-book (P/B) multiple of 21.7x. The following table summarizes some other key fundamental ratios:
| Metric | Value |
|---|---|
| Last Fiscal Period | FY2019.Q3 |
| Period End Date | September 30, 2019 |
| Stock Price (Current) | $339.67 |
| P/E Ratio | 105.3x |
| P/E Ratio (Fwd) | 98.5x |
| PEG Ratio | 1.6 |
| Total Debt to Capital (%) | 8.3% |
| Levered Free Cash Flow | -$2.876 billion |
| Enterprise Value / EBITDA | 64.2x |
Source: Finbox
Company Profile: Netflix, Inc.
Netflix, Inc. is a large-cap stock with a market capitalization of $148.9 billion and a total enterprise value of $158 billion. The company operates in the Communication Services sector and the Entertainment industry.
Netflix provides Internet entertainment services. The company operates in three segments: Domestic streaming, International streaming, and Domestic DVD. It offers TV series, documentaries, and feature films across various genres and languages. The company provides members 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. It also provides DVDs-by-mail membership services. The company has approximately 139 million paid members in 190 countries.
Netflix, Inc. was founded in 1997 and is headquartered in Los Gatos, California.
