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TheStreet Open House

Netflix (NFLX) Gets a Brand New Face, Unveils Makeover

Stocks in this article: NFLX

NEW YORK (TheStreet) -- Do not adjust your set: Netflix  (NFLX) is simply doing a makeover. The streaming movie provider is rolling out a redesign, more than a year in the making, in what it's calling the biggest innovation ever to its TV-viewing experience.

The interface renovation is a smart move to increase the billions of streaming hours already logged each month. Usage per subscriber already saw a boost in the third quarter to 42 streaming hours a month.

"We are excited to unveil the biggest update in Netflix history to our TV experience," said Chris Jaffe, vice president of product innovation, on the company blog. "We set out to deliver an update that would make it even easier to discover something great to watch and we think we succeeded."

Most notably, the Netflix home page menu now features an immersive banner along the top half of the screen, with a rotating image wheel, a series or movie plot overview and ratings from a user's social networks.

As before, each user's account will be personalized based on previously watched items, but the recommendation feature triggered after video has finished playing has been redesigned. Search now has a more intuitive design specifically tailored to TV screens, with new features including the ability to filter results by actor and director in addition to title and genre.

To streamline future rollouts, Netflix has ditched the bespoke design for individual set-top boxes, DVD players and game consoles streaming the content; instead, the company created its own platform to be adopted by each device so that updates are a be-all-end-all solution for more TV users.

"This new software platform will allow us to innovate even faster and continuously improve the Internet television experience for our members across multiple devices," said Chief Product Officer Neil Hunt in a statement.

An added benefit: Netflix will have greater control over how it wants users to interact with the brand, adding and subtracting features it knows affects how long eyeballs are glued to the set.

Two devices excluded from the overhaul, however, are Apple (AAPL) TV and Microsoft's (MSFT) Xbox, due to restrictive app developer guidelines. The redesign will be progressively rolled out over the next two weeks to all applicable devices.

TheStreet Ratings team rates Netflix Inc as a Hold with a ratings score of C. The team has this to say about their recommendation:

"We rate Netflix Inc (NFLX) a HOLD. The primary factors that have impacted our rating are mixed -- some indicating strength, some showing weaknesses, with little evidence to justify the expectation of either a positive or negative performance for this stock relative to most other stocks. The company's strengths can be seen in multiple areas, such as its robust revenue growth, solid stock price performance and compelling growth in net income. However, as a counter to these strengths, we also find weaknesses including disappointing return on equity and generally higher debt management risk."

Highlights from the analysis by TheStreet Ratings Team goes as follows:

  • The revenue growth came in higher than the industry average of 7.1%. Since the same quarter one year prior, revenues rose by 22.2%. Growth in the company's revenue appears to have helped boost the earnings per share.
  • Powered by its strong earnings growth of 300% and other important driving factors, this stock has surged by 320.77% over the past year, outperforming the rise in the S&P 500 Index during the same period. Regarding the stock's future course, our hold rating indicates that we do not recommend additional investment in this stock despite its gains in the past year.
  • Netflix Inc reported significant earnings per share improvement in the most recent quarter compared to the same quarter a year ago. This company has reported somewhat volatile earnings recently. But, we feel it is poised for EPS growth in the coming year. During the past fiscal year, Netflix Inc reported lower earnings of 29 cents a share vs. $4.17 a share in the prior year. This year, the market expects an improvement in earnings ($1.72 a share vs. 29 cents a share).
  • Despite currently having a low debt-to-equity ratio of 0.42, it is higher than that of the industry average, inferring that management of debt levels may need to be evaluated further. Despite the fact that NFLX's debt-to-equity ratio is mixed in its results, the company's quick ratio of 0.59 is low and demonstrates weak liquidity.
  • The company's current return on equity has slightly decreased from the same quarter one year prior. This implies a minor weakness in the organization. When compared to other companies in the Internet & Catalog Retail industry and the overall market, NETFLIX INC's return on equity is below that of both the industry average and the S&P 500.

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