Netflix Inc. NFLX, the global streaming giant, is set to report third-quarter 2024 earnings results on Oct. 17 before the opening bell. The stock price of Netflix has soared 54.3% year to date, surpassing the S&P 500’s rally of 22.6%.
Netflix has an Earnings ESP of +1.37% and carries a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Our research shows that for stocks with the combination of a Zacks Rank #1, 2 or 3 (Hold) and a positive Earnings ESP, the chance of an earnings beat is as high as 70%. These stocks are anticipated to appreciate after their earnings release. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.
The chart below shows the price performance of NFLX year to date.
Image Source: Zacks Investment Research
Factors That Should Drive NFLX’s Q3 Results
Netflix is projecting double-digit revenue growth and an increase in margins as it moves toward advertising for monetization. NFLX is benefiting from its growing subscriber base, thanks to a robust portfolio, paid subscription-sharing offering (part of its password-sharing crackdown), recent price changes and the strength of its business in general.
NFLX is expected to continue dominating the streaming space, courtesy of its diversified content portfolio, which is attributable to heavy investments in the production and distribution of localized and foreign-language content.
Netflix has witnessed a successful 2024 so far, buoyed by the success of shows like Bridgerton and Baby Reindeer. Market participants have high hopes about its upcoming releases such as Season 2 of Squid Game and a new season of Stranger Things in 2025. NFLX will show the Christmas schedule of the National Football League for the first time, and it will start showing wrestling on WWE Raw from 2025.
A section of analysts expects a price rise by NFLX and its positive effects on the company’s financials. Strong brand value and subscriber base will have incremental effects of price rise. This will enable Netflix to successfully compete with the likes of Apple Inc. AAPL, Amazon Prime Video of Amazon.com Inc. AMZN and Disney+ of The Walt Disney Co. DIS.
Impressive Earnings Estimate Revisions of NFLX Stock
For third-quarter 2024, the Zacks Consensus Estimate currently shows revenues of $9.77 billion, an improvement of 14.3% year over year and earnings per share (EPS) of $5.07, a jump of 35.9% year over year. The company reported positive earnings surprises in three out of the last four reported quarters with the average beat being 6.2%.
Moreover, Netflix has witnessed positive earnings estimate revisions for fourth-quarter 2024, full-year 2024 and full-year 2025 in the last seven days. At present, Zacks Consensus Estimate indicates a year-over-year increase of 14.8% and 58.9%, respectively, for revenues and EPS in 2024.
Despite this solid growth, the current Zacks Consensus Estimate for full-year 2025 revenues and EPS for NFLX reflects an upside of 12% and 19.7%, respectively. In addition, NFLX has a long-term (3-5 years) EPS growth rate of 26.4%, significantly higher than the broad-market index, the S&P 500’s growth rate of 13.6%.
Image Source: Zacks Investment Research
Price Potential of NFLX Shares
Netflix is currently trading near its 52-week high level. Currently, the short-term average brokerage target price is in the range of $900-$545. This indicates an upside potential of 24.5% and a downside potential of 24.6%. Nevertheless, we believe that NFLX’s favorable Zacks Rank and a possible earnings beat should drive its stock price in the short term.
Image Source: Zacks Investment Research
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Amazon.com, Inc. (AMZN) : Free Stock Analysis Report
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Netflix, Inc. (NFLX) : Free Stock Analysis Report
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