Netflix NFLX shares have climbed +34% this year and the rally may continue with the streaming giant expected to post substantial growth when it reports its Q2 results on Thursday, July 18.
Holding on to the title of streaming king ahead of Disney DIS, let’s dive into why now is a good time to buy Netflix stock.
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Compelling Subscriber Growth
Netflix currently has over 270 million paid subscribers staying firmly ahead of Disney which has roughly 150 million customers in its subscriber base when including Disney+, ESPN+, Hotstar, and Hulu.
For the second quarter, Netflix is thought to have added 5.41 million subscribers, a slight decrease from the 5.89 million additions in the same period last year. However, it's noteworthy that Netflix added 9.32 million subscribers during Q1 which blasted expectations of 5.73 million (Surprise of 3.59 million) and climbed from 1.75 million additions in the comparative quarter.
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Q2 Financial Expectations
Taking advantage of its subscriber growth, Netflix’s Q2 sales are projected to rise 16% to $9.53 billion. Even better, earnings are expected to soar 43% to $4.70 per share versus $3.29 a share in Q2 2023.
Notably, Netflix has exceeded earnings expectations in three of its last four quarterly reports posting an average earnings surprise of 9.26%.
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Monitoring Netflix’s P/E Valuation
Correlating with its expansion, Netflix shares have become more reasonably valued trading at 35.8X forward earnings compared to its five-year high of 108.3X while offering a slight discount to the median of 40.6X.
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Bottom Line
Considering its more reasonable P/E valuation now looks like an advantageous time to invest in Netflix’s monstrous growth. Furthermore, NFLX tends to spike when Netflix beats earnings expectations but would be a viable buy-the-dip candidate on a selloff as an intriguing investment for 2024 and beyond.
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It's only 1/9,000th the size of NVIDIA which skyrocketed more than +800% since we recommended it. NVIDIA is still strong, but our new top chip stock has much more room to boom.
With strong earnings growth and an expanding customer base, it's positioned to feed the rampant demand for Artificial Intelligence, Machine Learning, and Internet of Things. Global semiconductor manufacturing is projected to explode from $452 billion in 2021 to $803 billion by 2028.
See This Stock Now for Free >>Netflix, Inc. (NFLX) : Free Stock Analysis Report
The Walt Disney Company (DIS) : Free Stock Analysis Report
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