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Netflix is scheduled to
report Q208 results before the market opens on July 25. Based on
our analysis, we at
eChristianInvesting are expecting NFLX to report better than
expected results that beat Wall Street’s consensus expectations.
We are
forecasting revenues of $340.8M versus analyst consensus of
$337.6M. This would represent a 12% increase in revenues from
last year’s $303.7M in the same period.
While many
companies are suffering from the effects of a slowing economy,
we believe that Netflix has benefited from it. With more people
opting to stay close to home this year, they have found the
Netflix service to be a
surprisingly low-cost alternative to visiting the theaters or
even taking mini-vacations. Our sources point to strong y/y
subscriber growth leading to higher top-line revenues.
Share Performance
To date,
Netflix’s shares have gained 2%. That’s very good considering
the NASDAQ has dropped over 13%. Investors are clearly showing
their confidence in Netflix’s business model and their ability
to continue to attract customers even during challenging
economic conditions.
Valuation
Shares are
now trading at only 18x consensus 2009 EPS estimates. This is
inline with the
relative valuations of their peer group. However, we believe
that Netflix’s superior business model as well as the upside
opportunity in their upcoming earnings release should allow NFLX
shares to trade higher in the coming days.
At the time this article was
published, the author did not have a financial position in any
of the stocks mentioned in this article.
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Disclosure Policy |
