5-Hour Energy: A Success Equal Parts Caffeine, Chemistry and…
How State Taxes Put a Bigger Pinch on the PoorNetflix (NASDAQ: NFLX) is
the world's largest online movie rental service, providing more than seven million subscribers access to more than 90,000 DVD titles via U.S. mail delivery. The firm also has a growing library of more than 7,000 choices that can be watched instantly on customer PCs. Netflix does not have due dates/late fees and it employs user ratings to predict individual preferences and make movie recommendations. The firm has regional distribution centers throughout the United States. Blockbuster (NYSE: BBI) is a major competitor.
Investors were pleased last week, when Netflix guided Q1 EPS to 15-22 cents and Q1 revenues to $324-$328 million. Analysts had been looking for 20 cents and $325.18 million. Management also guided FY08 EPS to $1.18-$1.30 ($1.17 consensus) and FY08 revenues to $1.34-$1.39 billion ($1.33B consensus). The company's estimate of Q1 ending subscribers was boosted from 7.85-8.05 million to 8.16-8.26 million. The estimate of FY08 ending subscribers was raised from 8.4-8.9 million to 8.9-9.5 million.
The share price
popped on the news and then moved into a bullish "flag" consolidation pattern. Stocks frequently exit flags moving in the same direction they were traveling on entry. In this case, that would be to the upside.
Brokers recommend the issue with five "buys", eleven "holds" and one "underperform". Analysts see a 23% growth rate, through the next year. The NFLX Price to Sales ratio (1.70), Price to Cash Flow ratio (7.02), EPS Growth rate (14.29%), Return on Assets (10.66%) and Return on Investment (15.76%) compare favorably with industry, sector and S&P 500 averages. Institutions hold about 95% of the outstanding shares. The stock is one of those used to calculate the S&P 400 MidCap Index. Over the past 52 weeks, it has traded between $15.62 and $34.31. A stop-loss of $26.95 looks good here. Note that the firm is expected to report Q1 results in mid-April.
Larry Schutts is a contributing editor for Theflyonthewall.com and the Vice-President of Stockwinners.com. He does not hold positions in either of the stocks mentioned above.
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