Editor's Note: TheStreet ratings do not represent the views of TheStreet's staff or its contributors. Ratings are established by computer based on metrics for performance (which includes growth, stock performance, efficiency and valuation) and risk (volatility and solvency). Companies with poor cash flow or high debt levels tend to earn lower ratings in our model.
NEW YORK (
) has been reiterated by TheStreet Ratings as a hold with a ratings score of C . The company's strengths can be seen in multiple areas, such as its solid stock price performance, revenue growth and reasonable valuation levels. However, as a counter to these strengths, we also find weaknesses including deteriorating net income, disappointing return on equity and weak operating cash flow.
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Highlights from the ratings report include:
- Compared to its closing price of one year ago, NFLX's share price has jumped by 26.46%, exceeding the performance of the broader market during that same time frame. 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.
- Despite its growing revenue, the company underperformed as compared with the industry average of 20.1%. Since the same quarter one year prior, revenues rose by 10.1%. This growth in revenue does not appear to have trickled down to the company's bottom line, displayed by a decline in earnings per share.
- The gross profit margin for NETFLIX INC is currently very high, coming in at 74.90%. It has increased significantly from the same period last year. Regardless of the strong results of the gross profit margin, the net profit margin of 0.84% trails the industry average.
- The company, on the basis of change in net income from the same quarter one year ago, has significantly underperformed when compared to that of the S&P 500 and the Internet & Catalog Retail industry. The net income has significantly decreased by 87.7% when compared to the same quarter one year ago, falling from $62.46 million to $7.68 million.
- Net operating cash flow has significantly decreased to $0.15 million or 99.69% when compared to the same quarter last year. In addition, when comparing to the industry average, the firm's growth rate is much lower.
Netflix, Inc. provides Internet subscription services for TV shows and movies in the United States and internationally. The company offers its subscribers to watch unlimited TV shows and movies streamed over the Internet to their TVs, computers, and mobile devices. Netflix has a market cap of $5.26 billion and is part of the services sector and specialty retail industry. The company has a P/E ratio of 119.9, above the S&P 500 P/E ratio of 17.7. Shares are up 36.7% year to date as of the close of trading on Tuesday.
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--Written by a member of TheStreet Ratings Staff.
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