What to Expect When Netflix Reports After the Close

Media

July 16, 2018 9:15 am

Last Updated: January 11, 2020 8:58 pm

Netflix Inc. (NASDAQ: NFLX) is scheduled to release its second-quarter financial results after the markets close on Monday. The consensus estimates are $0.79 in earnings per share (EPS) and $3.94 billion in revenue. The same period of last year reportedly had EPS of $0.15 and $2.79 billion in revenue.

Netflix’s market cap is $172 billion at about $396 a share. Several analysts believe it will go much higher. The regular knock on the stock’s value is not the rise in Netflix subscriber count. The criticism is that it is in a war with studios and other tech companies for a lead in original programming.

The company says its commitment to programming is above $10 billion for the next three years. Its revenue in its most recently reported quarter was $3.7 billion, up from $2.6 billion in the year before. Its forecast for revenue in the current quarter was $3.9 billion.

Despite this rise in revenue, Netflix margins are tiny. It had net income of $290 million in its latest quarter, compared to $178 million in the year-ago period. The idea that a company that may make as little as $1 billion this year is worth $200 billion is considered absurd in many circles.

In fact, a few analysts ahead of this report have backed off their Buy ratings, and there are even a few with Sell calls. Prior to the release, a few analysts weighed in on Netflix:

Buckingham Research has an Underperform rating.
SunTrust Banks has a Hold rating with a $415 price target.
Canaccord Genuity has a Buy rating and a $500 price target.
Goldman Sachs has a Buy rating with a $490 target price.
Morgan Stanley has a Buy rating and a $480 target price.
JPMorgan has a Buy rating with a $385 price target.
Wedbush has a Sell rating with a $125 price target.

So far in 2018, Netflix has absolutely outperformed the broad markets, with its stock up about 106% in this time. Over the past 52 weeks, the stock is actually up 150%.

Shares of Netflix were last seen trading at $395.80, with a consensus analyst price target of $382.60 and a 52-week range of $160.02 to $423.21.