Time to Buy Netflix Stock as Q4 Earnings Approach?

As a reminder that U.S. markets are closed on Monday for Martin Luther King Day, investors will be looking ahead to Tuesday’s (Jan 21) trading session, which features Q4 results from Netflix NFLX .

Being one of the headline names of next week’s earnings lineup, let’s see if it’s time to buy Netflix stock for more upside with NFLX up over +70% in the last year.

Netflix Q4 Expectations

Netflix’s Q4 sales are thought to have increased 14% to $10.12 billion, compared to $8.83 billion in the comparative quarter. More impressive, the streaming giant’s Q4 EPS is expected to climb 98% to $4.19 versus $2.11 per share a year ago.

Netflix is slated to round out fiscal 2024 with a 15% increase in total sales at $38.86 billion, and a 64% spike in annual earnings with estimates at $19.77 per share versus EPS of $12.03 in 2023.

Notably, Netflix has exceeded sales estimates for five consecutive quarters and has surpassed earnings expectations in three of its last four quarterly reports with an average EPS surprise of 5.73%.

Netflix Subscriber Growth

Holding on to the title of streaming king ahead of Disney DIS , Netflix is expected to have added over 7 million subscribers during Q4 to $287.48 million total subscriptions. This would be a 10% spike from the $260.28 million subscribers the company had at the end of Q3 2024.

Monitoring Netflix’s Valuation

T r ading around $860 a share, NFLX is at a 35.6X forward earnings multiple which is a premium to the benchmark S&P 500’s 22.2X with Disney at 19X.

Considering Netflix stock has impressively outperformed the broader market and Disney shares in recent years, it is noteworthy that NFLX does trade well below its five-year high of 88.5X forward earnings and a slight discount to the median of 37.4X during this period.

Bottom Line

Ahead of its Q4 report next week, Netflix stock lands a Zacks Rank #3 (Hold). While NFLX tends to pop after favorable quarterly results, Netflix's Q4 report will need to reconfirm its attractive growth trajectory after an extensive rally over the last year.

Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report

Netflix, Inc. (NFLX) : Free Stock Analysis Report

The Walt Disney Company (DIS) : Free Stock Analysis Report

To read this article on Zacks.com click here.

Zacks Investment Research