What to Look for When Netflix (NFLX) Reports Q2 Earnings Monday

Netflix (NFLX) is expected to report a year-over-year decline in earnings but growth in revenue on Monday.
By Rachel Graf ,

NEW YORK (TheStreet) -- Netflix (NFLX) - Get Report is scheduled to report 2016 second-quarter financial results after the market close on Monday, with analysts modeling a year-over-year decline in earnings but growth in revenues. 

Analysts surveyed by Thomson Reuters are projecting adjusted earnings of 2 cents per share on $2.11 billion in revenues. A year ago, the video streaming service reported adjusted earnings of 6 cents per share on $1.65 billion in revenues.

Investors will likely focus on Netflix's subscriber growth figures. The company added 6.74 million new subscribers during the first quarter, but expects growth to slow to just 2.5 million net additions for the second quarter.

Analysts nonetheless expect Netflix to report solid subscriber growth trends for the most recent period.

"While it was prudent for management to temper second quarter expectations on the first quarter call...we believe the massive global launch in January and another strong slate of originals in the second quarter should offset these drags," Cantor Fitzgerald wrote in a note released this morning.

Canaccord Genuity similarly believes concerns about domestic growth are "overblown" as the company's content offering is "among the best."

"Internationally, further investments in content should help, and a push for more originals means improved customer acquisition potential as well as long-term margin benefits," the firm added.

Shares are up 0.10% to $98.12 today.

Separately, TheStreet Ratings team rates the stock as a "hold" with a ratings score of C+.

Netflix's strengths such as its robust revenue growth, expanding profit margins and solid stock price performance are countered by weaknesses including generally higher debt management risk, disappointing return on equity and weak operating cash flow.

You can view the full analysis from the report here: NFLX

TheStreet Ratings objectively rated this stock according to its "risk-adjusted" total return prospect over a 12-month investment horizon. Not based on the news in any given day, the rating may differ from Jim Cramer's view or that of this article's author. 

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