Netflix, Inc. (NFLX) continues to trade strong, recently hitting a new all-time high after reporting a hefty Q4 earnings surprise of 23%. With a bullish growth projection and PEG Ratio only slightly above 1, this Zacks #1 stock offers a good view on momentum.
Company Description
Netflix is a specialty video content company, offering both movies and television content through a mail and streaming subscription service. The company has a market cap of $11.75 billion.
With earnings season in full swing, we got a nice update on Netflix’s business, handily beating expectations with very strong Q4 results from late January.
Fourth-Quarter Results
Revenue for the period was up 34% from last year to $596 million. Earnings were also strong, coming in at 87 cents, 23% ahead of the Zacks Consensus Estimate, where the company has an average earnings surprise of 11%.
The good quarter was driven by continued growth in Netflix’s customer base, with total subscribers reaching 20 million, a 63% increase from last year and 18% jump from last quarter.
An item of curiosity was Netflix not providing forward guidance, something it has done in the past. Usually that’s a cause for concern for the analysts, but this time around it looks like the Street is willing to let it slide.
Financial Profile
Netflix also continues to strengthen its balance sheet, with cash and equivalents up $60 million from last year to $194 million. Total debt is mostly unchanged from last year at $236 million.
Estimates
The good quarter showed up in estimates, with the current year adding 6 cents to $4.33 and the next-year estimate up 10 cents to $6.21, a bullish 43% growth projection.
But in spite of the gains, the valuation picture still looks reasonable, with a PEG Ratio only slightly above 1, the typical benchmark for value.
12-Month Chart
Michael Vodicka is the Momentum Stock Strategist for Zacks.com. He is also the Editor in charge of the Zacks Momentum Trader Service.
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