Q3 Preview: Netflix (NFLX) to Stay Whole... for Now; Analysts as Confused as Management into Numbers
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Financial Fact:
Interest expense: -35.54M
Today's EPS Names:
BTTX, VAXX, ELYS, More
Financial Fact:
Interest expense: -35.54M
Today's EPS Names:
BTTX, VAXX, ELYS, More
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Netflix, Inc. (Nasdaq: NFLX) shares are trading lower ahead of its third-quarter 2011 report, expected out after the market closes Monday.
The Street pegs earnings for Netflix at 95 cents per share on revenue of $811.79 million for the quarter. Earnings would represent a decline of nearly 25 percent from last quarter, and 21.8 percent gain from 78 cents per share reported in the same period last year. Netflix has bested views by an average of 11.4 percent over the last four-quarters, leading to potential EPS of $1.06. Over the last 11 quarters, Netflix has done better, beating by 14.3 percent, for potential EPS of $1.09. But that's probably a best-case scenario.
Netflix shares plummeted through the quarter, dropping 57 percent to $113.27 at the end of September. The stock is up just 2.5 percent since then, but down 34 percent for 2011.
At the end of last quarter, Netflix carried a book value of about $6.36 per share with $7.17 per share in cash. It's current P/E ratio is about 18.9 times next years earnings, compared with 74.8 times for Amazon.com (Nasdaq: AMZN), and 9.2 times for Dish Network Corp. (Nasdaq: DISH).
Data from Bloomberg has 11 analysts at Buy on Netflix, 16 with a Hold, and 5 at Sell. The Street price target average is $180.70, with a low of $96 and high of $263. Netflix traded within a range of $103.13 to $304.79 over the last 52-week time frame.
In terms of options, Netflix implied volatility has moved from about 53 in the middle of July to 96 recently.
Finally, in mid-September Netflix trimmed it's domestic subs outlook from 10 million to 9.8 million. CEO Reed Hastings announced a new pricing scheme in July which basically charged those who were on a DVD-and-streaming plan 50 percent or more for the same deal. The adjustment reflects the fallout seen as a result.
Since then, Hastings and Co. decided to formerly separate the DVD rental and streaming media businesses, but have since reneged on the proposal following customer response.
Analyst Comments
Stay tuned to StreetInsider.com's EPS Insider section to see our analysis of the highly-anticipated quarterly results within seconds of their release. You can also check out Netflix's past performance at Streetinsider's Netflix Income Statement.
The Street pegs earnings for Netflix at 95 cents per share on revenue of $811.79 million for the quarter. Earnings would represent a decline of nearly 25 percent from last quarter, and 21.8 percent gain from 78 cents per share reported in the same period last year. Netflix has bested views by an average of 11.4 percent over the last four-quarters, leading to potential EPS of $1.06. Over the last 11 quarters, Netflix has done better, beating by 14.3 percent, for potential EPS of $1.09. But that's probably a best-case scenario.
Netflix shares plummeted through the quarter, dropping 57 percent to $113.27 at the end of September. The stock is up just 2.5 percent since then, but down 34 percent for 2011.
At the end of last quarter, Netflix carried a book value of about $6.36 per share with $7.17 per share in cash. It's current P/E ratio is about 18.9 times next years earnings, compared with 74.8 times for Amazon.com (Nasdaq: AMZN), and 9.2 times for Dish Network Corp. (Nasdaq: DISH).
Data from Bloomberg has 11 analysts at Buy on Netflix, 16 with a Hold, and 5 at Sell. The Street price target average is $180.70, with a low of $96 and high of $263. Netflix traded within a range of $103.13 to $304.79 over the last 52-week time frame.
In terms of options, Netflix implied volatility has moved from about 53 in the middle of July to 96 recently.
Finally, in mid-September Netflix trimmed it's domestic subs outlook from 10 million to 9.8 million. CEO Reed Hastings announced a new pricing scheme in July which basically charged those who were on a DVD-and-streaming plan 50 percent or more for the same deal. The adjustment reflects the fallout seen as a result.
Since then, Hastings and Co. decided to formerly separate the DVD rental and streaming media businesses, but have since reneged on the proposal following customer response.
Analyst Comments
- Goldman Sachs is looking for earnings of $1.19 on revenue of $803 million. Goldman sees domestic net subs dropping 700 thousand through the quarter and 435 thousand international net adds. Further, monthly gross profit per average sub is expected to drop 13.5 percent to $3.77, with an 8.8 percent drop in monthly revs per sub to $10.53.
For Netflix's fourth-quarter, Goldman expects domestic net adds of 1 million and international net adds of 560 thousand. Fourth-quarter revs expected to be $889 million, with EPS of $1.10, which would be mixed to current third-quarter estimates.
- Wedbush is modeling for revenue of $820 million and EPS of 96 cents. Commenting into the quarter, Wedbush says, "the backlash from the September 18 announcement will likely result in a lower domestic subs count, with overall guidance achieved by a strong Latin American rollout."
Wedbush also expects fourth-quarter guidance calling for earnings of $1.00 or below, hinting that Netflix could benefit from increased marketing spending.
- JPMorgan sees earnings of 70 cents per share in the quarter with revenue of $802 million, commenting that "the buy-side is generally lower than the sell-side on Netflix after the recent dislocations." JPMorgan also sees domestic net adds of 23.7 million in the quarter, lower than the revised 24 million issued by Netflix.
Looking ahead, JPMorgan sees fourth-quarter revenue and earnings guidance of $834 million and 95 cents per share, respectively.
On the call/in the release, JPMorgan will seek more color on LatAm expansion, the rationale behind timing and split of the DVD and streaming businesses, impact on streaming churn following the move, and detail about content licenses recently entered into as well as what Netflix is looking to do.
Stay tuned to StreetInsider.com's EPS Insider section to see our analysis of the highly-anticipated quarterly results within seconds of their release. You can also check out Netflix's past performance at Streetinsider's Netflix Income Statement.
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