With the stock’s valuation, it’s always a “heart attack on a plate” waiting for Netflix’s numbers, but the streaming giant has continued to deliver for shareholders, and the important technical metric is, in the last month, Netflix has traded over $700, or it’s 11/19/21 high print of $700, and the stock has remained above that key level. That being said, it hasn’t been a robust “breakout” but more of a lackluster move above the Nov ’21 peak.
There is no question the biggest improvement in Netflix’s fundamentals the last 3 years has been the improvement in operating cash-flow and free-cash-flow. In the Sept ’22 quarter, NFLX’s trailing-twelve-month free-cash-flow has just $533 million, and in the subsequent 7 quarters since then has risen to $6.8 billion as of the June ’24 quarter. Consensus estimate for free-cash-flow per LSEG for Q3 ’24 is $1.7 billion.
To round out the valuation metrics, NFLX is trading at 7x price-to-sales, and 29x and 41x price-to-cash-flow and price-to-free-cash-flow.That’s an 18-month look for Netflix. That’s a 31% increase in the EPS estimate from 6/30/23 through 10/16/24 for 2024 and then a 27% increase for the same period for 2025. Roughly 8 quarters ago, estimates were looking for high 20% EPS growth for 2024, today, the expected EPS growth for NFLX for 2024 is 60%.
It’s clear that NFLX’s advertising “flywheel” so to speak, might lead to additional revenue opportunities, but what those might be aren’t entirely clear yet. The two NFL football football games that will be offered Christmas Day could be an additional for Netflix given the 4th quarter every year is typically NFLX’s weakest quarter.
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