Netflix Earnings Day: Is the Stock Still a Long-Term Winner?

The video streaming company is set to release quarterly earnings results today, but what are the ramifications for the long-term investor?
By Kat McKerrow ,

All eyes are on Netflix (NFLX) - Get Report today. The video streaming service is scheduled to announce quarterly earnings after the closing bell, and analyst and investor sentiment is mixed. Since hitting its all-time high a year ago, Netflix stock has slid by more than 25%, and it's posted a year-to-date loss of more than 14%.

Netflix has had a hard time growing its subscriber numbers further in the U.S. However, the company has made inroads internationally. The stock's short-term performance depends on whether or not the subscriber numbers meet or exceed Wall Street's expectations. But in the long run, does Netflix still present an opportunity for investors?

In its last quarterly earnings announcement, Netflix indicated that it would add 2.5 million new subscribers worldwide during the second quarter. But Wall Street expects a higher figure: 2.63 million

Either way, the number is still lower than what Netflix recorded for the second quarter of 2015. Last year, the company had recently begun to expand internationally, leading the new subscriber number to clock in at 3.28 million.

Analysts will also be looking at the new subscribers the company anticipates adding in the third quarter of the year. Wall Street estimates the addition of nearly 775,000 U.S. subscribers and 2.85 million international members. If the company provides guidance surpassing these numbers, Netflix's stock could swing higher.

The market for streaming video in the U.S. has simply become too saturated. And Netflix faces considerable opponents in the form of Amazon and Hulu, which is a joint-venture project among Walt Disney, 21st Century Fox, and Comcast.

Comcast is a holding in Jim Cramer's Action Alerts PLUS Charitable Trust Portfolio. See how Cramer rates the stock here. Want to be alerted before Cramer buys or sells CMCSA? Learn more now.

However, there is still a good bit of strength left in this stock. Although Netflix is up against growing competition, it is still hands-down the dominator in its field. A few years ago, the company made a considerable bet on creating its own content...and won. The company's hit series such as Orange Is the New Black and House of Cards have sparked interest from new viewers, leading to significant boosts to subscriber numbers. In turn, that has translated into profits.

Netflix continues to bolster its portfolio of video offerings, both creating new films and series and distributing beloved titles. Today, the company announced that it will be the international viewing home for the newest ParamountStar Trek series, which is sure to gain the company a legion of global subscribers.

These deals make Netflix an attractive play for the long term. As it continues to add new titles to its portfolio and bring in new customers from around the world, investors should be pleased with the stock's movement.

Any pessimism toward the stock following its earnings announcement should be viewed as an opportunity to buy in at a discount. Keep an eye on Netflix, buy on dips, and hold this stock.

---

As you can see, Netflix still has potential for the long-term investor. However, if you're intrigued by the idea of guaranteed income, take a look at this: a simple step-by-step process that will add a significant boost to your earnings this year. The trader who is sharing this secret has been right more than 8 out of 10 times, turning $5,000 into more than $5 million for himself. Click here to see how easy it is to follow his lead and collect thousands of dollars in "Free Money" every month.

This article is commentary by an independent contributor. At the time of publication, the author held TK positions in the stocks mentioned.

Loading ...