Netflix Inc. (NASDAQ:NFLX) Quarterly Earnings Preview

• Wedbush analysts predict an EPS of $4.31, surpassing both Netflix's guidance and Wall Street consensus.
• Netflix's ad tier membership is expanding, with global net subscriber additions expected to hit 10 million.
• The company forecasts a 14.7% year-over-year revenue increase and a significant improvement in operating margin.

Netflix Inc. (NASDAQ:NFLX) is a leading streaming service provider known for its vast library of movies, TV shows, and original content. As it prepares to release its quarterly earnings on January 21, 2025, Wall Street analysts estimate an earnings per share (EPS) of $4.21 and revenue of approximately $10.14 billion. Netflix competes with other streaming giants like Disney+ and Amazon Prime Video.

Wedbush analysts have reiterated their 'Outperform' rating for Netflix, anticipating an EPS of $4.31, which surpasses both the company's guidance of $4.23 and the Wall Street consensus of $4.20. They project revenue to reach $10.154 billion, exceeding the company's guidance of $10.128 billion and the consensus estimate of $10.122 billion. This suggests a strong financial performance for the quarter.

Despite a slowdown in overall subscriber growth in the fourth quarter, Netflix's ad tier membership is expanding. Wedbush predicts net subscriber additions of 1.25 million in the United States and Canada, below their previous estimate of 2 million. However, globally, they expect 10 million net subscriber additions, surpassing the consensus of 9.2 million, with positive trends in Latin America and Asia-Pacific.

Netflix anticipates a 14.7% year-over-year revenue increase, reaching $10.13 billion, aligning with Wall Street expectations. The company projects a net income of $1.85 billion and diluted EPS of $4.23, nearly doubling the $2.11 reported in the fourth quarter of 2023. An operating income of $2.19 billion and an operating margin of 21.6% are also forecasted, marking a five percentage point improvement from the previous year.

Netflix's financial metrics indicate a strong market position. With a price-to-earnings (P/E) ratio of 46.69, investors are willing to pay 46.69 times the company's earnings over the past year. The price-to-sales ratio is 9.65, and the enterprise value to sales ratio is 9.88, reflecting the company's valuation relative to its sales. The debt-to-equity ratio of 0.70 suggests a moderate level of debt compared to equity, while a current ratio of 1.13 indicates reasonable short-term financial health.