Financial results from Netflix (NFLX) are eagerly awaited as the streaming services giant surges without providing subscriber growth forecasts anymore. With a whopping 260 million users by the close of 2023, Netflix dominates the streaming space.
Netflix’s stock performance is even more impressive, having surged by 26% year-to-date, outpacing Disney’s 25% and overshadowing competitors like Paramount Global (PARAA) and Warner Bros. Discovery (WBD).
But is it the right time to consider buying Netflix shares with the upcoming Q1 report on the horizon post-market hours on Thursday, April 18?
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Q1 Preview
According to Zacks estimates, Q1 sales for Netflix are predicted to rise by 13% to $9.26 billion. The Zacks Consensus expects a significant 56% surge in Q1 earnings to $4.51 per share compared to $2.88 per share in the same period last year.
Encouragingly, the Zacks ESP hints that Netflix might exceed bottom-line expectations, with the Most Accurate Estimate projecting Q1 EPS at $4.53, slightly above the Zacks Consensus.
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Streaming Estimates
Driven by a cheaper alternative service with paid advertising, Netflix’s subscriber growth surpasses Disney Plus and other emergent streaming platforms. As per Zacks estimates, Netflix is expected to have added 5.73 million global paid memberships in Q1, a remarkable 227% surge from the 1.75 million added in Q1 2023.
In a recent feat, Netflix gained a staggering 13.12 million paid subscribers in Q4, exceeding estimates by 48%.
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Checking Netflix’s P/E Valuation
Netflix’s shares currently trade at 36.2X forward earnings, significantly below the five-year high of 114.9X and a slight discount to the median of 49.7X. The company is projected to witness a 42% surge in annual earnings in fiscal 2024 to $17.05 per share from $12.03 per share last year. Furthermore, FY25 EPS is anticipated to climb by an additional 23%.
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Bottom Line
Having seen an astounding YTD rally to over $600 per share, Netflix’s stock currently holds a Zacks Rank #3 (Hold). While NFLX is more reasonably valued, meeting or surpassing Q1 expectations is crucial to reaffirm the company’s robust growth trajectory.
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