NEW YORK (TheStreet) -- Netflix  (NFLX)  stock is surging 2.63% to $123.38 in late afternoon trading on Friday, after an RBC Capital Markets report found record usage levels of the Internet television network.

RBC's quarterly U.S. Internet user survey of more than 1,000 people found that 51% of respondents use Netflix to watch movies and TV. The streaming service's usage surpassed competitors such as YouTube (GOOGL) and Amazon (AMZN).

Churn rates are also near record lows, with 75% of respondents "not at all likely" to cancel, the firm added. 

Netflix's original shows, such as House of Cards, is an important factor driving retention, RBC found. Netflix is expected to spend between $500 million to $1 billion on original content next year.

"We believe that Netflix has achieved a level of sustainable scale, growth, and profitability that isn't currently reflected in its stock price," RBC said. "This conclusion is based on our assessment of Netflix's 43 million U.S. subscriber and 26 million international subscriber bases, which makes Netflix one of the largest global entertainment subscription businesses."

Separately, 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 solid stock price performance, robust revenue growth and expanding profit margins. However, as a counter to these strengths, we also find weaknesses including deteriorating net income, generally higher debt management risk and disappointing return on equity.

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

  • Compared to its closing price of one year ago, NFLX's share price has jumped by 98.61%, exceeding the performance of the broader market during that same time frame. 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 revenue growth trails the industry average of 38.2%. Since the same quarter one year prior, revenues rose by 23.3%. 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 84.59%. It has increased from the same quarter the previous year. Regardless of the strong results of the gross profit margin, the net profit margin of 1.69% trails the industry average.
  • Current return on equity is lower than its ROE from the same quarter one year prior. This is a clear sign of weakness 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.
  • Net operating cash flow has significantly decreased to -$195.97 million or 423.43% 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

Any reference to TheStreet Ratings and its underlying recommendation does not reflect the opinion of Jim Cramer, TheStreet or any of its contributors.

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