What To Hold: Netflix Inc.'s Hold Recommendation Reiterated

Editor's Note: Any reference to TheStreet Ratings and its underlying recommendation does not reflect the opinion of TheStreet, Inc. or any of its contributors including Jim Cramer or Stephanie Link.

NEW YORK ( TheStreet) -- Netflix (Nasdaq: NFLX) 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 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 ratings report include:
  • The revenue growth came in higher than the industry average of 7.6%. 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 300.00% and other important driving factors, this stock has surged by 329.48% 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 $0.29 versus $4.17 in the prior year. This year, the market expects an improvement in earnings ($1.72 versus $0.29).
  • 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.

Netflix, Inc. provides Internet television network service that enables subscribers to stream TV shows and movies directly on TVs, computers, and mobile devices in the United States and internationally. Netflix has a market cap of $21.1 billion and is part of the services sector and specialty retail industry. The company has a P/E ratio of 299.00, above the S&P 500 P/E ratio of 18.00. Shares are up 284.8% year to date as of the close of trading on Thursday.

You can view the full Netflix Ratings Report or get investment ideas from our investment research center.

--Written by a member of TheStreet Ratings Staff.

STOCKS TO BUY: TheStreet Quant Ratings has identified a handful of stocks that can potentially TRIPLE in the next 12-months. Learn more.

null

More from Markets

Tesla Slumps After Mary McCormack Tweets Husband's Flaming Model S

Tesla Slumps After Mary McCormack Tweets Husband's Flaming Model S

Stocks Dive Globally as U.S.-China Trade War Intensifies

Stocks Dive Globally as U.S.-China Trade War Intensifies

China Trade War, Google, JD.com, Tesla, Brooks Koepka - 5 Things You Must Know

China Trade War, Google, JD.com, Tesla, Brooks Koepka - 5 Things You Must Know

Google Invests $550 Million in JD.com and 4 Other Stories to Watch Monday

Google Invests $550 Million in JD.com and 4 Other Stories to Watch Monday

Global Oil Prices Mixed as OPEC Production Talks, China Tariffs Weigh on Markets

Global Oil Prices Mixed as OPEC Production Talks, China Tariffs Weigh on Markets