The king of home DVD delivery and streaming video to almost every entertainment device available has rallied in recent weeks, reaching a 52 week high just yesterday. Running from $49.13 a share to $66.65 a share yesterday, earnings and the stock’s price to earnings both look decent at this time.
The recent news that Warner Brothers movies will not be available through Netflix (NFLX) or kiosk chain Redbox for 28 days after a DVD’s release has not affected the stock price in recent weeks. The two distributors will wait on making new releases available to improve the studio’s profits on sold movie DVDs. They also agreed to destroy the DVDs after they are no longer widely rented instead of selling them to the public.
Netflix beat earnings expectations for the fourth quarter by roughly 25% and has nice revenue and earnings growth. Revenue growth is near 25% for the coming quarters with earnings growth at 46% this quarter and at 26% next quarter. Analysts increased their expectations within the past 30 days for the quarter earnings from 45 cents a share to 54 cents a share, thus sparking the recent increase in share price.
The price to earnings (P/E) is at 33 with the stock price near $65 at the close yesterday. This is slightly lower than the 46% earnings increase but higher than next quarter's 25% expected increase. If analysts nudge their expectations higher again, the stock should move accordingly. Look for this increase as a chance to buy or look for a slight sell off for your chance to trade the stock long.
Disclosure: No positions