Netflix (NFLX) reported quarterly results that added angst, uncertainty, and worry for investors. Shares gained buyers after being touted as a favorite bullish position for Hedge Fund manager Whitney Tilson.
The Good News
- Netflix added 2 million new subscribers worldwide
- Total subscribers rose to 29 million, with 25.1 million from the United States
- Net income was 8 million
- Company reiterated it was committed to original programming
…and the Bad News
- DVD subscriptions declined from 9.24 million in the previous quarter to 8.61 million in the quarter
- Original programming will mean negative free cash flow for the next several quarters
- Competition from HBO (TWX) and Amazon (AMZN), and Hulu in online streaming is growing
- Content liabilities now total $5 billion
- $2.1 billion in liabilities is due in 12 months
Analysis
Investors should take note of the negative cash flow, deterioration in profit margins, and unknown obligations. Netflix said the liabilities did “not include obligations that we cannot quantify but could be significant.”
Netflix forecast it will lose between $2 million and $13 million next quarter.
Valuation
Using Kapitall tools, Netflix has a Price of Profit (the amount you are paying for $1 of next year’s profit) of over 70. Its Book Value per Share is $12.39, Price to Book Ratio is 5.5x. The P/E is 38.2x.
Business Section: Investing Ideas
To evaluate the future prospects for Netflix further using Kapitall’s tools, below is a related list of companies to look at.
Online Streaming:
1. Netflix, Inc. (NFLX, Earnings, Analysts, Financials): Provides subscription based Internet services for TV shows and movies in the United States and internationally. Market cap at $3.34B, most recent closing price at $60.12.
2. Amazon.com Inc. (AMZN, Earnings, Analysts, Financials): Operates as an online retailer in North America and internationally. Market cap at $103.29B, most recent closing price at $228.49.
3. Pandora Media, Inc. (P, Earnings, Analysts, Financials): Operates as an Internet radio company in the United States. Market cap at $1.57B, most recent closing price at $9.29. Pandora is not a direct competitor for Netflix, but its offers online music streaming.
Content:
4. Time Warner Inc. (TWX, Earnings, Analysts, Financials): Operates as a media and entertainment company in the United States and internationally. Market cap at $41.76B, most recent closing price at $44.01.
5. Walt Disney Co. (DIS, Earnings, Analysts, Financials): Operates as an entertainment company worldwide. Market cap at $90.88B, most recent closing price at $50.65.
6. CBS Corporation (CBS, Earnings, Analysts, Financials): Operates as a mass media company in the United States and internationally. Market cap at $21.17B, most recent closing price at $33.07.
7. Comcast Corporation (CMCSA, Earnings, Analysts, Financials): Provides entertainment, information, and communications products and services in the United States and internationally. Market cap at $97.45B, most recent closing price at $36.42.
Written by Chris Lau. To interact and discuss these picks with users, attach your watch list or portfolio to your friends on Kapitall. To connect with users on the leaderboard: on your tool bar, select Get Connected -> Top Kaptallists.
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Analyze These Ideas: Getting Started
- Read descriptions for all companies mentioned
- Access a performance overview for all stocks in the list
- Compare analyst ratings for the companies mentioned
- Compare analyst ratings to annual returns for stocks mentioned
- Real-Time Opinion: Scan the latest tweets about these companies (feed will open in a new window)
Dig Deeper: Access Company Snapshots, Charts, Filings
- Netflix, Inc. (NFLX, Chart, Download SEC Filings)
- Amazon.com Inc. (AMZN, Chart, Download SEC Filings)
- Pandora Media, Inc. (P, Chart, Download SEC Filings)
- Time Warner Inc. (TWX, Chart, Download SEC Filings)
- Walt Disney Co. (DIS, Chart, Download SEC Filings)
- CBS Corporation (CBS, Chart, Download SEC Filings)
- Comcast Corporation (CMCSA, Chart, Download SEC Filings)
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