Netflix Beats Estimates Again, Shares Rewarded - Analyst Blog

Internet TV network Netflix NFLX posted Q1 earnings results after the bell Monday, and once again the company posted a positive surprise: 86 cents per share beat the Zacks Consensus Estimate of 83 cents on in-line revenues of $1.27 billion in the quarter. Neither number is much of a surprise. Netflix always beats earnings estimates, or at least it has over the past 6 quarters -- often soundly.

After-market traders are putting Netflix back on the momentum track after the earnings announcement (up 6.6% in the late market), and this may be attributed to a higher-than-forecast new subscriber growth number: between domestic and international subscribers, Netflix hit 4 million in Q1, above the projected 3.85 million. This figure is even more meaningful when one considers competitors in the market Netflix had not long ago controlled exclusively; these growth numbers suggest that at this time, it doesn't seem like a company like Amazon AMZN has taken meaningful share from Netflix's subscriber base.

The company also announced a price increase for new subscribers, amounts of which will vary based on region but generally be in the $1-2 category. The last time Netflix announced a price increase on its subscribers, NFLX stock got hammered. But this moderated increase is providing a shock to no one's system. In fact, it may have even been anticipated, as Netflix earlier this month agreed to pay a fee to Comcast CMCSA to increase Netflix service speeds to Comcast subscribers. How high this fee will be was not announced.

Netflix shares are rebounding from a major sell-off of momentum stocks in recent weeks -- shares had been down 24% from their all-time highs reached on March 4 of this year. Prior to the earnings announcement, Netflix was trading down 5.35% year-to-date, though year over year NFLX stock is up 113%.

The company retains its Zacks Rank #1 (Strong Buy) status, and has been one of the best-performing stocks of the Zacks Focus List since being added in March of 2013. And with now 48 million subscribers worldwide, CEO Reed Hastings' company appears to still be in the veritable cat-bird seat. Whether the momentum-trade rollercoaster will yank the share price this way and that as we continue through heavier market volatility than we've seen in awhile remains to be seen, but Q1 was yet another good earnings quarter for Netflix.