By
Chimamanda U. Martha
March 11th, 2024
Netflix’s massive investment in producing original content paid off at the 2019 Academy Awards on Sunday night, as the streaming giant tied for most wins among Hollywood studios. Meanwhile NFLX stock hits new 2019 high.
The company scored four Oscars at the show “Roma,” written and directed by Hollywood mainstay Alfonso Cuaron, won three awards, including Best Foreign Film, Best Cinematography and Best Director. “
Another Netflix winner is the short film “Period. End of Sentence.” The film won for best documentary short.
Netflix opened trading at $363.57 a share. This is a 0,15% increase from the previous day’s close.
During last week’s trading 7,056,465 shares of Netflix changed hands. Average trading volumes during the previous three months session stood at 12.14M shares.
Wall Street Being Very Optimistic
At the moment, the debt-to-equity of Netflix, Inc. is high, standing at 198.29, a figure that is higher than the 34.18 average recorded by the industry. NFLX shares have a strong debt-to-equity ratio but their quick ratio which reads 1.50 is strong and might cause problems for them later in the future.
Shares of major movie theater chains lagged the market on Monday morning. AMC Entertainment Holding (AMC) fell 0.1%, Cineworld Group (CINE.UK)—the parent of Regal Cinemas—rose 0.2%, and Cinemark Holdings (CNK) dropped 0.6%, while Netflix stock rose 1.5%. The S&P 500 was up 0.7%.
One of the reasons Wall Street is so optimistic about the outlook for Netflix stock is because of a subtle bit of guidance the company issued in its earnings report. After hovering around 12% for the first three quarters of 2018, Netflix reported operating margins of only 5.2% in the fourth quarter.
$8B Spent on Original Content
When an enemy tries to strip you out of your advantages, you need to retaliate quick and take the initiative back into your own hands. That’s precisely what Netflix is doing by spending $8 billion last year on original content, trying to keep its momentum and remain at the top of its game.
We already wrote of how Disney plans to launch Disney Plus later this year and Amazon continues to spend resources on promoting Prime Video. At the same time, Netflix is prepared to face competition in any form or shape in the foreseeable future and the latest letter to shareholders stating:
“We are also prepared to keep our members ecstatic with our incredible original content if others choose to retain their content for their own services.”
Netflix, Inc. has seen their earnings per share increased to $0.30 during the last quarter in comparison to the same quarter last year. They have recorded a -66.69% declining earnings per share earnings. Analysts expect increase in earnings is also on the cards next quarter with an average estimate at $0.24. In the fiscal year 2018, Netflix, Inc. overcame its bottom line by hitting earning $2.68 per share compared to the $1.25 in 2017.
For long term trading, fundamental analysis offer prominent indicator for trend change. Moving on to the Company’s growth rates, sales of the Enterprise in the most recent quarter against the quarter in year ago period was 27.42%, which is in fact lesser the overall industry rate of 10.41%.
It’s sales trailing twelve months (earlier 12 successive months used for reporting financial figures) against the sales trailing twelve month is 35.08% versus 19.23% posted by the whole industry. So the stocks growth rate is healthier than the overall Industry’s growth rate.
Does Netflix Have Capacity to Fill the Investor’s Pockets in Future?
For this, let’s take a glance at what market analysts have to say about the stock. Netflix at this time has received an agreement rating of an ‘Overweight’ from the panel of analysts. If we break down the complete analysis, 44 different analysts have given out their observation on the Company’s stock.
28 of them believe that NFLX is a ‘Buy’. 3 of them recommends it as an ‘Overweight’, 10 believes it is worth holding, zero have recommended the stakeholder that the stock is ‘Underweight’ and 3 rated it as ‘Sell’.
In the meantime, 3 months before, consensus of 41 different analysts rated the stock as ‘Overweight’. With 23 went for Buy, 4 gave the rating of Overweight 13 analysts advised to hold the stock. 0 Analysts have called it Underweight and 1 of them rated the stock as a Sell.