Earnings season continues to move forward, with many companies finally pulling the curtain back and unveiling quarterly results daily.
And many more are scheduled to report in the coming weeks.
This week, we’ll receive results from a widely-popular company, Roku ROKU.
Roku is the leading TV streaming platform provider in the United States based on hours streamed, quickly becoming a favorite among investors as video streaming snowballs.
How does the company shape up heading into the release? We can use results received from a few peers, Netflix NFLX and The Walt Disney DIS, as a small gauge. Let’s take a closer look.
Netflix Q4
Netflix reported mixed top and bottom line results, falling short of the Zacks Consensus EPS Estimate by a wide 75%.
Quarterly revenue totaled $7.8 billion, modestly ahead of estimates and growing 2% year-over-year.
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However, the focus point of the entire release remained the company’s Net Subscriber Additions.
Results came in well above expectations; Netflix reported Net Subscriber Adds of roughly 7.7 million, handily beating our consensus estimate of 4.5 billion by nearly 70%.
It represented the company’s third consecutive quarter exceeding our consensus estimate for Net Subscriber Additions, undoubtedly a major positive.
Net Subscriber Additions Surprise %
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The market cheered on the better-than-expected Subscriber Additions, with Netflix shares climbing nearly 9% the following trading session.
Disney Q1
Disney posted better-than-expected results, exceeding the Zacks Consensus EPS Estimate by more than 40% and reporting revenue modestly ahead of expectations.
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Of course, a focus point of the company’s release was its Disney+ results, the company’s premium streaming service that’s been a great hit among consumers.
Disney reported 162 million paid Disney+ subscribers, beating our consensus estimate of 157 million by 3%.
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Roku
Quarterly Estimates –
Analysts have been bearish in their earnings outlooks, with four negative earnings estimate revisions hitting the tape over the last several months. The Zacks Consensus EPS Estimate of -$1.74 suggests a steep decline from the year-ago quarter.
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The company’s top line is in better health, with our consensus revenue estimate of $21.9 billion suggesting a positive 14% year-over-year change.
Quarterly Performance –
Roku posted better-than-expected results in its latest release, exceeding the Zacks Consensus EPS Estimate by more than 35% and reporting revenue nearly 9% above expectations. Additionally, it’s worth noting that the recent bottom line beat snapped a streak of negative surprises.
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Valuation –
Following a rough stretch of price action in 2022, Roku’s valuation multiples have pulled back by considerable margins; ROKU shares currently trade at a 2.4X forward price-to-sales ratio, a fraction of the 9.3X five-year median.
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Further, the company’s TTM price-to-book currently sits at 2.8X, again well beneath the 19.6X five-year median.
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Putting Everything Together
Earnings season is one of the most critical periods for stocks as investors finally see what’s transpired behind closed doors.
This week, we’ll receive quarterly results from Roku. We’ve already received quarterly results from a few peers, Netflix NFLX and Disney DIS, with both companies posting better-than-expected subscriber results.
Analysts have primarily been bearish for Roku’s quarter, with estimates suggesting a decrease in earnings but an uptick in revenue year-over-year.
In addition, the company’s valuation multiples have returned to a more reasonable level following a harsh 2022.
Heading into the release, Roku ROKU is a Zacks Rank #3 (Hold) with an Earnings ESP Score of 1.9%.
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