Rick Pendergraft's Avatar
Rick Pendergraft
published in Blogs
Oct 15, 2020
Netflix Set to Report Third Quarter Earnings Results

Netflix Set to Report Third Quarter Earnings Results

The new normal in terms of the economy has helped some companies. As more and more people work from home and stay home rather than going out, certain companies have seen the demand for their services grow. Netflix (NFLX) is one of the companies that seems to be benefitting.

The company is set to report third quarter earnings results on October 20 and it is expected to show earnings growth of 44.9% over the third quarter of last year. Earnings are also expected to jump by 33% over the second quarter.

Netflix has seen earnings grow by 82% per year over the last three years while revenue has grown by 30% per year. Second quarter results showed EPS growth of 165% over the previous year and revenue was up 25%. The company’s return on equity is well above average at 29.1% while the profit margin is slightly below average at 10.2%.

Looking at the Tickeron Scorecard for Netflix we see that the stock is rated as a “strong buy”. The company scores positive results in three fundamental categories and it receives one negative result—the Valuation Rating. The stock is currently trading with a trailing P/E of 91 and a forward P/E of 62. The three positive results are in the Profit vs. Risk rating, the SMR rating, and the Price Growth rating.

We also see that the stock has four bullish signals and two bearish signals from the technical indicators. The bullish signals are from the AROON indicator, MACD, Momentum, and the Moving Averages. Three of the signals came 10 days ago and one was 22 days ago. The two bearish signals are from the RSI and Bollinger Bands. The bearish signal from the RSI was generated 22 days ago while the signal from the Bollinger Bands came nine days ago.

The weekly chart shows an upwardly sloped trend line that connects the lows from the past year, with the exception of the extreme low in March. I have seen this pattern with a number of stocks and I attribute it to the meltdown in February and March being a black swan event. Investors sold everything without really considering which companies could potentially benefit from the economic lockdowns that were being implemented. Investors panicked.

We see that the stock dropped for the first two and a half months of the third quarter before turning higher over the last four weeks. The pullback allowed the 10-week RSI and the weekly stochastic readings to move out of overbought territory. The RSI dropped down to the 50 area and the stochastic indicators fell below the 50 level. The indicators hadn’t been that low since last November.

Something that is unique to Netflix is how its report is analyzed. For most companies investors focus on three things— earnings, revenue, and the outlook. For Netflix there is a fourth element that is always watched closely and that is the subscriber growth.

In the first half of 2020, Netflix added 25.9 million subscribers which is approximately the same number of subscribers that were added in the entire year of 2019. As part of the second quarter report, management put a damper on investor expectations by saying it only expected 2.5 million in subscriber growth for the third quarter. Despite the outlook from management, two different analysts have made statements that run counter to the downbeat forecast from management. An analyst from KeyBanc Capital raised his price target on October 15 and he cited subscriber growth as one of the reasons. An analyst with Goldman Sachs raised his price target on October 14 and the raised target also cited subscriber growth as one of the reasons.

Seeing these kinds of actions ahead of an earnings report might seem like good news, but it could also be a sign that expectations are running high. Investors should consider the expectations as a hurdle—the higher they are, the harder it is to clear.

Related Tickers: NFLX
Sergey Savastiouk's Avatar
Sergey Savastiouk
published in Blogs
Mar 07, 2021
4 Tricks Hedge Funds Use to Get Ahead

4 Tricks Hedge Funds Use to Get Ahead

If the stock market were Major League Baseball, hedge funds and institutional investors would be the pros on championship teams while everyday self-directed investors (SDIs) are the benchwarmers in the minors.It’s how they get ahead, and it’s why 90% of SDIs lose money trying to play (invest and trade) in the major leagues. The 4 tricks we discuss below are rooted in one common theme: they all use Artificial Intelligence and algorithms to generate data and ideas.
John Jacques's Avatar
John Jacques
published in Blogs
Mar 22, 2018
A.I. Stock Market Predictions: Head & Shoulders

A.I. Stock Market Predictions: Head & Shoulders

Statistics for the Head-and-Shoulders Bottom Pattern The days where only hedge funds used algorithms to trade stocks are officially over. Now retail investors can use Artificial Intelligence (A.I.  Here’s an example of the algorithm in action: Late last year, Tickeron’s A.I.
Sergey Savastiouk's Avatar
Sergey Savastiouk
published in Blogs
Jul 10, 2020
3 Stocks to Buy if Coronavirus Second Wave Hits

3 Stocks to Buy if Coronavirus Second Wave Hits

By analyzing market trends from the first wave, you can predict behavior for the second. Technology stocks have performed at historic levels this year, but the market is severely overbought.To compensate for that, look at performance during Q1 and Q2, the height of global Covid shutdowns.
Edward Flores's Avatar
Edward Flores
published in Blogs
Feb 06, 2021
How to Become the Millionaire Next Door

How to Become the Millionaire Next Door

The Golden Gate Bridge is always a fixture of these walks too, one of man's most beautiful creations.  As we were walking, at one point she turned to me and said, "Man, I'll never have a million dollars."" My girlfriend is 27 years old and works as a graphic designer, making about $75,000 a year.
Alla Petriaieva's Avatar
Alla Petriaieva
published in Blogs
Feb 23, 2021
Is Ethereum’s Bomb about to Explode?

Is Ethereum’s Bomb about to Explode?

Ethereum’s software is set for an update in October.Until it is finished, participants in the Ethereum blockchain must determine how to delay the difficulty bomb – code that necessitates a steadily increasing amount of computer power to mine blocks and unlock rewards – that is already in place.
Sergey Savastiouk's Avatar
Sergey Savastiouk
published in Blogs
Aug 07, 2018
When Is the Next Recession Coming?

When Is the Next Recession Coming?

However, we also know that economists predicted 22 recessions out of 11 that took place since 1945. Are there real recession signs we should watch for?Indeed, the answer is yes, and here are a few very important ones: The first one is almost obvious and known to everyone – it is the Fed.
Abhoy Sarkar's Avatar
Abhoy Sarkar
published in Blogs
May 22, 2020
Central banks have been buying $2.4 billion in assets every hour for the past two months

Central banks have been buying $2.4 billion in assets every hour for the past two months

Some $17.8 billion has been poured into  bond markets over the past week, the biggest move in more than three months.Around $3.5 billion has been invested into gold, the second largest on record. 
Rick Pendergraft's Avatar
Rick Pendergraft
published in Blogs
Feb 07, 2021
Mid-January Short Interest Report Shows 8 Stocks with Good Fundamentals and High Short Interest
Sergey Savastiouk's Avatar
Sergey Savastiouk
published in Blogs
Mar 10, 2021
How to Start Trading Penny Stocks

How to Start Trading Penny Stocks

Penny stocks have long been marginalized within the professional investment community, oftentimes being painted with a broad brush of simply being “too risky.” Leonardo DiCaprio’s depiction of the penny stock peddling conman, Jordan Belfort, in the Wolf of Wall Street certainly didn’t help.Here are four reasons to start trading them now. Reason #1: Let’s State the Obvious -- Penny Stocks are Cheap A single share of Apple Inc. costs over $350.
Abhoy Sarkar's Avatar
Abhoy Sarkar
published in Blogs
May 08, 2020
US unemployment rate jumps to 14.7%, the highest in series history

US unemployment rate jumps to 14.7%, the highest in series history

The U.S. economy’s employment fell by -20.5 million in April. The coronavirus crisis led to unemployment rate soaring to 14.7% in the U.S, the highest rate in the Bureau of Labor Statistics-tracked series history that goes back to 1948. However, the figures were better compared to several economists'/analysts' forecasts of 22 million job losses and 16% unemployment rate.  Another unemployment measure that includes those who have stopped looking for work as well as those holding part-time jobs for economic reasons also touched an all-time high of 22.8%.