Anticipated Earnings Performance

As Netflix gears up to reveal its Q3 2024 results post-market on October 17, investors are keeping a keen eye on the company’s financial fundamentals. Demonstrating an 8.6% surge in its stock price over the last three months–a slight uptick against the industry’s 7% average–Netflix is poised for a strong performance leading into earnings season.

Analyst Insights and Predictions

Analysts predict a positive outlook for Netflix, evident from its +1.37% Earnings ESP and Zacks Rank #2 (Buy). The combination of a favorable Earnings ESP alongside a Zacks Rank #1, 2, or 3 increases prospects for an earnings beat.
No revisions were made to Netflix’s earnings estimates in the last seven or thirty days; anticipations include a 35.9% earnings growth and a 14.3% rise in revenue for the upcoming quarter. With a stellar track record of average earnings surprises of 6.15% over the past four quarters, Netflix continues to excel. Positioned within a top-tier Zacks industry, the company appears as a promising contender in a sector ripe with competition.

On average, Netflix currently boasts an ABR of 1.89 and has garnered high recommendations from brokerage firms, with the majority signaling Strong Buy and Buy positions. Expectations for Netflix’s stock price vary, with analysts projecting an average price target of $715.75.

Growth Trajectory

Netflix is on a trajectory of robust growth, driven by innovative initiatives like its paid-sharing program and ad-based revenue streams. The crackdown on password sharing has not only attracted new users but also solidified its standing as a market leader. Venturing into live and sports programming this year, Netflix is expanding its offerings beyond traditional boundaries, with plans to stream NFL games this Christmas, a move widely believed to reduce churn rates and entice new subscribers.

Evaluating Valuations

Netflix’s current P/E ratio of 37.81 may seem steep compared to the industry average of 10.60, but its impressive Growth Score of B validates its high valuation–signaling considerable room for future expansion.

Spotlight on Key ETFs

MicroSectors FANG+ ETN (FNGS)

With a focus on NYSE FANG+ Index, MicroSectors FANG+ ETN offers exposure to leading growth stocks in tech and next-gen companies. Featuring Netflix as a significant constituent at 10%, this ETF has gathered $380 million in assets and maintains a Zacks ETF Rank #3 (Hold).

Invesco Next Gen Media and Gaming ETF (GGME)

Tracking the STOXX World AC NexGen Media Index, this ETF holds a diverse portfolio of 89 stocks, with Netflix occupying 8% of the assets. With $41.1 million under management and an expense ratio of 60 bps, Invesco Next Gen Media and Gaming ETF stands as a prominent player with a Zacks ETF Rank #3.

First Trust Dow Jones Internet Index Fund (FDN)

As a Dow Jones Internet Composite Index follower, this ETF offers broad exposure to the internet industry. Netflix accounts for 7.8% of the portfolio across its holdings, with an AUM of $6 billion and an impressive daily trading volume. With an expense ratio of 51 bps and a Zacks ETF Rank #1 (Strong Buy), FDN embodies growth prospects within the tech sphere.

Communication Services Select Sector SPDR Fund (XLC)

Designed for industry exposure within communication services, this fund boasting a robust $18.2 billion asset base carries Netflix as a significant holding at 6.1%. Bolstered by the Communication Services Select Sector Index, XLC presents a diverse investment opportunity for those eyeing growth in this sector.