How Do Analysts See Netflix Inc (undefined:NFLX) Performing In Next 12 Months?
Since Netflix Inc (NASDAQ:NFLX) released its earnings in September 2017, analyst consensus outlook appear vastly optimistic, as earnings are expected to increase by more than twofold next year, compared with the past 5-year average growth rate of 11.99%. Currently with earnings of $186.7M, we can expect this to reach $383.1M by 2018. In this article, I’ve outline a few earnings growth rates to give you a sense of the market sentiment for NFLX in the longer term. Readers that are interested in understanding NFLX beyond these figures should research its fundamentals here. View our latest analysis for Netflix
How is NFLX going to perform in the near future?
The 40 analysts covering NFLX view its longer term outlook with a positive sentiment. Since forecasting becomes more difficult further into the future, broker analysts generally project out to around three years. To understand the overall trajectory of NFLX’s earnings growth over these next fews years, I’ve fitted a line through these analyst earnings forecast to determine an annual growth rate from the slope.
From the current net income level of $186.7M and the final forecast of $1,024.0M by 2020, the annual rate of growth for NFLX’s earnings is 44.11%. This leads to an EPS of $5.3 in the final year of projections relative to the current EPS of $0.44. The primary reason for earnings growth is due to cost cutting activities, as revenues is expected to grow much slower than earnings. With a current profit margin of 2.11%, this movement will result in a margin of 6.19% by 2020.
Next Steps:
Future outlook is only one aspect when you’re building an investment case for a stock. For Netflix, I’ve put together three fundamental factors you should look at:
1. Financial Health: Does it have a healthy balance sheet? Take a look at our free balance sheet analysis with six simple checks on key factors like leverage and risk.
2. Valuation: What is NFLX worth today? Is the stock undervalued, even when its growth outlook is factored into its intrinsic value? The intrinsic value infographic in our free research report helps visualize whether NFLX is currently mispriced by the market.
3. Other High-Growth Alternatives : Are there other high-growth stocks you could be holding instead of NFLX? Explore our interactive list of stocks with large growth potential to get an idea of what else is out there you may be missing!
To help readers see pass the short term volatility of the financial market, we aim to bring you a long-term focused research analysis purely driven by fundamental data. Note that our analysis does not factor in the latest price sensitive company announcements.
The author is an independent contributor and at the time of publication had no position in the stocks mentioned.
