馃摵 NETFLIX: ANALYSIS 馃摵
Netflix, Inc. provides entertainment services. It offers TV series, documentaries, feature films, and mobile games across various genres and languages. The company provides members the ability to receive streaming content through a host of internet-connected devices, including TVs, digital video players, television set-top boxes, and mobile devices. The company has approximately 231 million paid members in 190 countries. Netflix, Inc. was incorporated in 1997 and is headquartered in Los Gatos, California.
Based on a sample of the last year [Dec/23 TTM], its average margins have been:
- Gross margin: ≈ 39.5%
- Operating margin: ≈ 18.3%
- EBITDA margin: ≈ 19.9%
- Net margin: ≈ 14.4%
Pros:
- Operates in a relatively oligopolistic sector (its rivals are Discovery, Amazon, HBO, Disney, Apple and Hulu).
- Acceptable margins for its main business sector and nice net debt.
- Well positioned and increasing subscribers.
Cons:
- Low Growth CAPEX and high Maintenance CAPEX
- High impact of subscribers and seasonality
- High current valuation that limits some upside in the stock price
Based on the last report, their normalized EPS was ≈ $12.4 USD and its last average ROIC [TTM] was ≈ 22.7%. If an annual average Forward PER 33 is set as a benchmark with an EPS intensity of ± 34.27%, the potential forward spread target for the next 12 months could be:
- Optimistic: ≈ $549.5 USD
- Neutral: ≈ $409.4 USD
- Negative: ≈ $269.1 USD
At least, an EPS of $2.89 USD is required for the next quarter, to keep the metrics.
In other hand, if an annual average Forward EV/EBITDA 25 is set, an EBITDA increases of ± 43%, a Net Debt increases of -12.3%, a Dividends increase of 0% and Shares Outstanding increases of -2%, the potencial spread price target for the next 12 months could be:
- Optimistic: ≈ $587.1 USD
- Neutral: ≈ $396.3 USD
- Negative: ≈ $219.4 USD
Finally, according to its current P/S ratio, a possible spread might be at:
- P/S 5: ≈ $386.8 USD
- P/S 8: ≈ $618.9 USD
The best analysis is yours!
M.F. J. Joel Padilla
Copyright: Joel Padilla 2024
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