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Netflix (NFLX) to Report Q1 Earnings: Is a Beat in Store?

Zacks

Netflix Inc. NFLX is set to report first-quarter 2018 results on Apr 16.

Last quarter, the company reported earnings of 41 cents per share, which came in line with the Zacks Consensus Estimate but soared a whopping 173.3% on a year-over-year basis. Revenues of $3.286 billion surged 32.6% year over year and surpassed the consensus mark of $3.281 billion.

For the first quarter of 2018, the Zacks Consensus Estimate for Netflix’s earnings per share and total revenues are pegged at 63 cents and $3.689 billion, respectively, representing a year-over-year increase of 65.8% and 39.9%.

Notably, shares of Netflix have skyrocketed 112.4% in the past year, significantly outperforming the industry’s 18.8% rally.


Let’s see, how things are shaping up for this announcement.

Factors to Consider

Netflix’s top line is driven by subscriber growth, both in the international and domestic markets. The company has been drawing strength from its growing portfolio of original content.


In the first quarter, Netflix released a new sci-fi series titled Altered Carbon and a six-episode chat show, My Next Guest Needs No Introduction with David Letterman, featuring influential personalities like Barack Obama, which garnered a huge response.

The company has also been focusing on expanding its global footprint by ramping up efforts to boost regional programming. Its portfolio with diverse content is what makes the platform so attractive to the users.

Moreover, Netflix’s growing popularity among teenagers is evident from the recently released Piper Jaffray’s 35th semi-annual Taking Stock with Teens survey.

Per the survey, Netflix’s dominance in video consumption is increasing and is currently the most preferred platform among teens. Reportedly, the respondents spend 39% of their time watching Netflix, up by 2% from the survey of 2017 fall while competitors, namely Alphabet’s GOOGL YouTube, Hulu and Amazon AMZN stand at 30%, 5% and 3%, respectively.

We believe, the company’s strength of content portfolio will boost its subscriber growth across the globe. However, high costs accompanying its rapid international expansion and production of original content might weigh on the bottom line.

Netflix, Inc. Price and EPS Surprise

Netflix, Inc. Price and EPS Surprise | Netflix, Inc. Quote

What Our Model Says

Per the Zacks model, a company with a favorable Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) and a positive Earnings ESP has good chances of beating estimates.

The Sell-rated stocks (4 or 5) are best avoided, especially when the company is seeing negative estimate revisions.

You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

Netflix has a Zacks Rank #2, which increases the predictive power of ESP and its Earnings ESP of +1.00% raises confidence about a possible earnings surprise. Thus, our proven model shows that the stock is likely to deliver a positive surprise this quarter.

Another Key Pick

Here is another stock worth considering from the same space with the right combination of elements to beat on earnings in its upcoming release:

Paycom Software Inc. PAYC has an Earnings ESP of +0.33% and a Zacks Rank of 1. You can see the complete list of today’s Zacks #1 Rank stocks here.

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