January 20, 2025
Netflix
NFLX is slated to report fourth-quarter 2024 results on Jan. 21.
For the fourth quarter of 2024, Netflix forecasts revenues to increase 15%, which equates to 17% growth on an F/X-neutral basis.
The company anticipates total revenues to be $10.12 billion, suggesting growth of 14.7% year over year. The consensus mark for revenues is pinned at $10.12 billion, in line with the company’s expectations.
NFLX has projected earnings of $4.23 per share. The Zacks Consensus Estimate for the same is pegged at $4.19 per share, currently lower than the company’s expectations. The estimate has moved south by 0.5% over the past 30 days.
Find the latest earnings estimates and surprises on Zacks Earnings Calendar
.
The company’s fourth-quarter results are expected to benefit from its diversified content portfolio, which involves heavy investments in the production and distribution of localized and foreign-language content.
In the last reported quarter, the company delivered an earnings surprise of 6.09%. The company’s earnings beat the Zacks Consensus Estimate in three of the trailing four quarters and missed in one, the average negative surprise being 5.73%.
Netflix, Inc. price-eps-surprise | Netflix, Inc. Quote
Our proven model predicts an earnings beat for Netflix this time around. The combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) increases the odds of an earnings beat. You can uncover the best stocks to buy or sell before they are reported with our Earnings ESP Filter.
NFLX has an Earnings ESP of +0.19% and a Zacks Rank #3 at present. You can see the complete list of today’s Zacks #1 Rank stocks here.
Netflix expects paid net additions to be higher sequentially in the fourth quarter due to normal seasonality and a strong content slate.
In the fourth quarter, the company released hit returning series
Squid Game S2, Outer Banks S4
and
Love is Blind S7
, as well as new dramas like
Black Doves
from the United Kingdom and comedies like
No Good Deed
and
Man on The Inside
. In Latin America, the company had two of the biggest shows ever made in the region premiering in winter, namely
100 Years of Solitude
(based on the iconic novel by Gabriel García Márquez from Colombia) and
Senna
(a biopic about one of the greatest
Formula 1
drivers of all time from Brazil).
Netflix’s unscripted offerings included
Aaron Rodgers: Enigma
, which chronicles the life and career of the NFL legend, and the second season of the music competition series
Rhythm + Flow
. The company’s film rollouts included action-thriller
Carry-On
, war drama
The Six Triple Eight
and
Spellbound
produced by John Lasseter.
The company projects its fourth-quarter operating margin of 22%, indicating an improvement of five percentage points year over year.
The company's growing games portfolio, featuring popular titles like
Grand Theft Auto: The Trilogy
, is likely to have enhanced user engagement and attracted new subscribers. In the second quarter, the company added
Virgin River
and
Perfect Match
to its gaming roster. This diversification into gaming demonstrates Netflix's commitment to providing a comprehensive entertainment experience.
Despite these positive factors, Netflix has been facing significant challenges in an increasingly competitive streaming landscape. The company contends with robust rivals, such as
Disney
’s DIS Disney+, HBO Max, Peacock, Paramount+,
Apple
’s AAPL Apple TV+ and
Amazon
's AMZN Prime Video services. Additionally, Netflix competes for consumer attention against traditional linear TV, YouTube, short-form content platforms like TikTok and the gaming industry.
The Zacks Consensus Estimate for paid total streaming net membership additions is pegged at 9.11 million.
The consensus mark for fourth-quarter 2024 Asia-Pacific revenues is pegged at $1.15 billion, indicating 20.4% growth from the figure reported in the year-ago quarter.
The Zacks Consensus Estimate for Latin America revenues is pegged at $1.23 billion, suggesting a rise of 7% from the figure reported in the previous quarter.
Moreover, the consensus mark for EMEA revenues is pegged at $3.21 billion, suggesting an increase of 15.5% from the figure reported in the year-ago quarter.
The Zacks Consensus Estimate for the United States and Canada revenues is pegged at $4.49 billion, indicating a 14.2% rise from the figure reported in the year-ago quarter.
Shares of Netflix have surged 76.8% in the past year compared with the Zacks Consumer Discretionary sector, Apple, Amazon and Disney’s return of 13.4%, 21.9%, 47.2% and 16.1%, respectively.
Now, let’s look at the value Netflix offers investors at current levels. Currently, NFLX is trading at 36.31X forward 12 months earnings, above its five-year median of 33.82X. Meanwhile, the Zacks Broadcast Radio and Television industry’s forward earnings multiple sits at 26.32X. The company’s valuation looks somewhat stretched compared with its range and the industry average.
Netflix presents a balanced investment case heading into fourth-quarter 2024. The company projects higher sequential subscriber additions, supported by a diverse content slate, including Squid Game S2, 100 Years of Solitude and Senna . Strategic expansion into gaming with Grand Theft Auto: The Trilogy and an expected operating margin improvement to 22% demonstrate operational strength. However, fierce competition from Disney+, HBO Max, Apple TV+ and Amazon Prime Video, alongside challenges from traditional TV, YouTube and TikTok, creates a complex landscape. Netflix's content production capabilities provide advantages, but market competition warrants careful consideration.
Investors may benefit from holding existing positions or awaiting a more attractive entry point ahead of fourth-quarter earnings. While the company's robust content slate and projected margin expansion to 22% signal operational strength, these positive catalysts appear largely priced into the stock. The heightened competition in the streaming space and Netflix's significant outperformance against peers like Apple, Amazon and Disney suggest limited near-term upside potential. Prudent investors should monitor fourth-quarter execution, particularly subscriber growth trends and content performance, before increasing exposure to the stock.
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