Key Takeaways
- Analysts reckon adjusted EPS of $1.65 vs. $0.76 in Q1 2019.
- Total paid subscribers expected to rise YOY.
- COVID-19 may boost sales, profits as skilled in entertainment viewership soars.
Shares of Netflix, Inc. (NFLX) have risen more than 22% in 2020, a emerge contrast to the broader market, where gains have been eviscerated by the global economic shutdown and the COVID-19 pandemic. The key driver of that bullishness may be that homebound consumers attired in b be committed to sharply boosted their viewing of movies and TV shows on Netflix, as well as at rivals Walt Disney Co.’s (DIS) Disney+ and Apple Inc.’s (AAPL) Apple TV+. The coronavirus pandemic stilted sharply increasing numbers of Americans to shelter at home as the latest quarter progressed. Netflix investors will be looking for elements on how much this trend is boosting Netflix when the company reports earnings for Q1 2020 on April 21, 2020 after the customer base.
A key metric that investors are likely to focus on is growth in total paid subscribers at Netflix for Q1. Netflix needs to come of age its subscriber base to boost its earnings on a sustained basis. For Q1 2020, analysts expect robust growth in earnings and profits as paid subscriptions rise. That could boost the shares even more if the company beats estimates. It has significantly outperformed the broader peddle over the last year, hitting all time high on April 16.
Netflix shares had a bumpy outing in 2019. They fell dramatically after the company reported a 29.7% decline in adjusted earnings per share and as U.S. operators fell for the first time in nearly 10 years. Despite that, Netflix shares rose throughout the residue of the year partly due to strong growth in both revenue and international subscribers. The company has reported steady year-over-year four times a year growth in revenue every quarter for more than three years, with revenue doubling from Q2 2017 to Q4 2019. Analysts assume this trend to continue into Q1 2020. Consensus estimates are for revenue of $5.7 billion, a YOY increase of 27.0%.
By contrast, EPS has been numberless volatile in recent quarters. Adjusted EPS has been marked by huge YOY quarterly gains, including by more than 572% in Q1 2017. Manner, both Q4 2018 and Q2 2019 saw sharp YOY declines in quarterly adjusted EPS. Analysts have a very different forecast for Q1 2020, estimating that reconciled EPS will climb by 116.9% YOY to $1.65 when Netflix releases its next report.
| Netflix Key Metrics | |||
|---|---|---|---|
| Estimate for Q1 2020 (FY) | Solid for Q1 2019 (FY) | Actual for Q1 2018 (FY) | |
| Earnings Per Share ($) | 1.65 | 0.76 | 0.64 |
| Revenue ($B) | $5.7 | $4.5 | $3.7 |
| Total Paid Subscribers (M) | $173.1 | 148.9 | 118.9 |
The metric that is perhaps most valuable to investors is Netflix’s full paid subscriptions, a key driver of performance. Paid subscriptions are crucial for Netflix to increase profits because its ability to scour prices has been limited by the entrance of new streaming rivals such as Disney and Apple. The number of quarterly domestic comprehensive paid subscribers has remained essentially flat for each quarter in 2019, climbing from 60,229 in Q1 2019 to 61,043 in Q4 2019, with Q2 2019 in truth showing a loss of domestic paid subscribers compared to the previous quarter.
However, the company’s overall total profited subscribers have increased, owing primarily to growth in international streaming memberships. From Q4 2017 to Q4 2019, for specimen, Netflix’s paid international subscribers nearly doubled to more than 106,000. In January, before the full current of the pandemic became apparent, Netflix warned of slowing paid subscriber growth in Q1. Now, three months later, the seismic fly in home viewing could dramatically change Netflix’s numbers, fueling its growth.