Will Netflix (NFLX) Stock Gain Today From Expansion Down Under?

NEW YORK (TheStreet) -- Shares of Netflix (NFLX) are slightly higher at $381.59 in pre-market trade after the subscription-streaming service, building on an expansion this year in Europe, will enter Australia and New Zealand in March, Bloomberg reports.

Original series "Marco Polo" and "BoJack Horseman" will be available at launch along with kids' titles fromDreamWorks Animation DWA, the company said in statement.

Netflix, which pioneered streaming video paid monthly, has entered new markets to gain subscribers and pay for the rising cost of rights for TV shows and movies. The company plans a "sizable expansion" in 2015, Chief Financial Officer David Wells said at an investor conference a week ago. In September, the company entered six European territories, including France and Germany, Bloomberg said.

The company will offer high-definition and so-called 4K, or ultra high-definition, programming where available, it said.

During the year, the selection in Australia and New Zealand will expand to include the thriller "Bloodline," Marvel's "Daredevil" and "Sense8," from the creators of "The Matrix," the company added.

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, impressive record of earnings per share growth and compelling growth in net income. However, as a counter to these strengths, we also find weaknesses including weak operating cash flow and generally higher debt management risk."

Highlights from the analysis by TheStreet Ratings Team goes as follows:

  • The revenue growth came in higher than the industry average of 12.6%. Since the same quarter one year prior, revenues rose by 27.4%. Growth in the company's revenue appears to have helped boost the earnings per share.
  • NETFLIX INC reported significant earnings per share improvement in the most recent quarter compared to the same quarter a year ago. The company has demonstrated a pattern of positive earnings per share growth over the past year. We feel that this trend should continue. This trend suggests that the performance of the business is improving. During the past fiscal year, NETFLIX INC increased its bottom line by earning $1.85 versus $0.29 in the prior year. This year, the market expects an improvement in earnings ($3.41 versus $1.85).
  • Compared to where it was a year ago today, the stock is now trading at a higher level, reflecting both the market's overall trend during that period and the fact that the company's earnings growth has been robust. We feel that the combination of its price rise over the last year and its current price-to-earnings ratio relative to its industry tend to reduce its upside potential.
  • Despite currently having a low debt-to-equity ratio of 0.52, 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 0.65 is low and demonstrates weak liquidity.
  • Net operating cash flow has significantly decreased to -$37.44 million or 207.91% when compared to the same quarter last year. In addition, when comparing to the industry average, the firm's growth rate is much lower.
  • You can view the full analysis from the report here: NFLX Ratings Report
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