NEW YORK (TheStreet) -- Netflix (NFLX) shares could be impacted by 21st Century Fox's (FOXA) unsuccessful $80 billion bid for Time Warner (TWX).
The $85 per share Fox offered for Time Warner could support Netflix valuation if Mediatech Capital Partners analyst Porter Bibb is correct about Fox's main interest in Time Warner being its HBO segment and its global streaming opportunity.
Fox's takeover bid was spurred by its interest in the Time Warner's HBO segment, according to a Bloomberg TV interview with Bibb, and if Fox is willing to spend $80 billion for control of HBO's content and distribution, Netflix's own valuation could benefit.STOCKS TO BUY: TheStreet Quant Ratings has identified a handful of stocks that can potentially TRIPLE in the next 12 months. Learn more.
Netflix shares are up 0.4% to $450.96 in early market trading today.
TheStreet Ratings team rates NETFLIX INC as a Hold with a ratings score of C+. TheStreet Ratings Team has this to say about their recommendation:
"We rate NETFLIX INC (NFLX) a HOLD. The primary factors that have impacted our rating are mixed - some indicating strength, some showing weaknesses, with little evidence to justify the expectation of either a positive or negative performance for this stock relative to most other stocks. The company's strengths can be seen in multiple areas, such as its robust revenue growth, solid stock price performance and impressive record of earnings per share growth. However, as a counter to these strengths, we find that the company has favored debt over equity in the management of its balance sheet."
Highlights from the analysis by TheStreet Ratings Team goes as follows:
- The revenue growth came in higher than the industry average of 4.4%. Since the same quarter one year prior, revenues rose by 24.0%. Growth in the company's revenue appears to have helped boost the earnings per share.
- Powered by its strong earnings growth of 1620.00% and other important driving factors, this stock has surged by 79.86% over the past year, outperforming the rise in the S&P 500 Index during the same period. Although NFLX had significant growth over the past year, our hold rating indicates that we do not recommend additional investment in this stock at the current time.
- NFLX's debt-to-equity ratio of 0.61 is somewhat low overall, but it is high when compared to the industry average, implying that the management of the debt levels should be evaluated further. Regardless of the somewhat mixed results with the debt-to-equity ratio, the company's quick ratio of 0.74 is weak.
- Current return on equity exceeded its ROE from the same quarter one year prior. This is a clear sign of strength within the company. 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.
- You can view the full analysis from the report here: NFLX Ratings Report