Netflix (NFLX) will release its 1st quarter 2013 financial results on Monday, April 22nd at 10:05 pm ET. Below I have provided an update of the quarter as well as an overview of earnings expectations.
Profile and Estimates
Netflix has a market cap of $9.48 billion and currently trades for $169.36 per share. Shares are up 82.91% YTD and trade 220.7% above their 52 week low of $52.81. Analysts have a mean target price of $141.46 and a median price target of $131.00 on the shares. Twenty seven analysts have an average first quarter earnings per share estimate of $0.18 on estimated revenues of $1.02 billion. Netflix has beat earnings estimates in all of the last four quarters.
Fundamentals and Highlights (Data Sources Listed At End of Article)
- Revenues 3 year average growth rate is 29.3%, well above the industry averages 7.5%.
- Low subscription fee and higher alternative cable packages makes product attractive.
- Book value per share has risen in the last four years from $3.73 in 2009 to $13.40 in 2012.
- International growth will drive future revenue streams.
- Very large subscriber base with first mover advantage.
- P/E of 625, P/B of 13.2, and P/S of 2.9 all above the industry averages 54.1, 5.0 and 1.3 respectively.
- Operating margins of 1.4%, net margin of 0.5% and ROE of 2.5 are all below the industry averages 4.4%, 4.2% and 17.6 respectively.
- D/E of 0.5 compared to the industry averages 0.3.
- Margins have declined over the last three years, in 2012 they were 27.2% compared to 36.3% in 2011.
- Free cash flow was negative last year, negative $67 million.
- DVD distribution advantage has virtually disappeared and been replaced by digital content streaming.
- Starz recently announced that it will not renew with Netflix, Starz owns the streaming rights to Disney and Sony movies.
Shares have more than doubled this year on revenue growth speculation. So far, with increased revenues, Netflix has only become less and less profitable so its hard for me to believe investors could justify the current share price but it is what it is. I rarely suggest shorting a stock but this would be at the top of my list were I to choose one due for a significant downward correction. I expect the stock to be very volatile during this release so, Investors Beware!
Other company data sourced from annual report that you can find here.