Netflix Still in Play After Big Gain

NEW YORK (TheStreet) -- There is no doubt that Netflix (NFLX) has been one of the best performers in the Nasdaq 100, with a weighted alpha of 145.28+. During the last 12 month, the stock is up more than 325% and still seems to keep going. We have all read about all the pricing mistakes it has made and the reversal of customer satisfaction, but is it real?

Compared to the market in the last six month, Netflix gained 44%, while the market, as measured by the Value Line Index, was up only 15% for the same period:

Courtesy of Barchart

Let's look at some of the numbers and comparisons:

Fundamental Factors

The stock is definitely a large cap, with a market capitalization of $14.37 billion, but it has a high price-to-earnings ratio of 236.23. Wall Street analysts predict the revenue will grow 20.10% this year and an additional 17.10% next year. They estimate earnings will increase 413.80% this year, another 121.50% next year and continue to increase by 22.50% annually for the next five years. The Financial Strength is B++, but TheStreet Ratings gives it only a C.

Technical indicators provided by Barchart: The stock has high 80% technical-buy signals coupled with a Trend Spotter buy signal. The stock is trading above its 20-, 50- and 100-day moving averages and had 10 new highs and was up 17.55% in the last quarter. The stock has a Relative Strength Index of 58.94% and a technical support level computed at 248.48. It recently traded at 255.85, with a 50-day moving average of 236.13.

Investor Interest

The stock has become popular with both individual and professional investors. 382 institutions own 87% of the shares outstanding. 35 analysts from 29 Wall Street firms issued 3 strong buys, 8 buys, 17 holds, 4 underperforms and 3 sell recommendations to their clients. I gauge individual investors' sentiment from the readers of Motley Fool and 9,781 readers vote 80% that the stock will beat the market. The more experienced All Stars gave a more confident vote of 93% for a beat. It should be noted that the short interest has dropped from almost 10 million shares back in January to around 4 million share recently.

Peer Comparisons

It's hard to find peer comparisons for Netflix, but let's look at a variety of companies that sell or provide video content to an Internet audience. In the past year, Netflix was up 327%, Amazon ( AMZN) 27%, Hastings Entertainment ( HAST) 86% and Barnes & Noble ( BKS) 27%:

Courtesy of Barchart

Amazon: Market cap $135.12 billion with an average P/E of 2,112, based on Monday's trading. Revenue is projected to grow 21.80% this year and 21.40% next year. Earnings are estimated to increase 1,055.60% this year, 234.90% next year and continue at the rate of 36.33% annually for the next five years.

Hastings Entertainment: Market cap of only $30.77 million with a loss: Revenue is projected to shrink 4.40% this year and another 4.70% next year. Earnings are estimated to increase by 28.90% this year, 79.00% next year and continue to increase at 7.00% annually for the next five years.

Barnes & Noble: Market cap of $1.09 billion, but a loss in earnings. Sales projected to decrease by 6.10% this year and another 2.70% next year with earnings going up by 60.80% this year but decreasing by 27.90% next year and continuing to decrease by 167.10% annually for the next five years.

Summary

Clearly Netflix is in a class of its own and can't be compared with others in the industry. The stock is bouncing back from a bad place but is very popular with both the individual and professional investor. After a rise of 327% in the past year, the major portion of the gain may be over, but for those already in position, or willing to take a short-term chance, I advise watching the 100-day moving average, or the more sensitive 14-day turtle channel to decide where to place stop-loss orders or mental exit points:

Courtesy of Barchart

At the time of publication I do not own shares in any of the stocks mentioned in this article.

At the time of publication, the author held no positions in any of the stocks mentioned.

This article is commentary by an independent contributor, separate from TheStreet's regular news coverage.

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