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The Zacks Analyst Blog Highlights Netflix, The Walt Disney, Warner Bros Discovery and Bank of America

For Immediate Release

Chicago, IL – February 27, 2024 – Zacks.com announces the list of stocks featured in the Analyst Blog. Every day the Zacks Equity Research analysts discuss the latest news and events impacting stocks and the financial markets. Stocks recently featured in the blog include: Netflix, Inc. NFLX, The Walt Disney Co. DIS, Warner Bros. Discovery, Inc. WBD and Bank of America Corp. BAC.

Here are highlights from Monday’s Analyst Blog:

Why You'll Regret Not Buying Netflix (NFLX) Stock Soon

Streaming behemoth Netflix, Inc. had stellar top-line growth in 2020 and 2021, which regrettably dropped to single digits in 2022 and 2023.

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However, things are looking up for Netflix this year, as it is positioned to be a foremost streaming service provider compared to its peers, such as The Walt Disney Co. and Warner Bros. Discovery, Inc.

Netflix, in reality, has been crowned "the king in streaming" by Bank of America Corp. as it has become crystal clear that Netflix has won all the recent streaming wars hands down. Netflix's budding advertising business, by the way, is expected to be a fast-growing venture in 2024.

Netflix is aiming to increase membership in its ad-supported tiers. So far, the initiatives have been fruitful, with the company's ad tier touching more than 23 million monthly active users at the beginning of this year.

Netflix's strategic move to crack down on free account sharing is also expected to boost revenue growth this year. Netflix's paid-sharing policy has been able to substantially improve membership growth in recent times and is likely to remain a tailwind for a few upcoming quarters.

The company has efficiently built infrastructure to scrutinize households logging into someone else's Netflix account for free. At the same time, Netflix has got its streaming pricing strategy accurate in times of relentless inflation, while other streaming players have overcharged their customers.

Netflix's investments in live programs and video games have paid off. It aired a live program called "The Netflix Cup," and has obtained absolute rights to stream "WWE Raw." Meanwhile, Netflix's Grand Theft Auto turned out to be the best-selling video game franchise of all time.

On the earnings front, Netflix has already posted encouraging results in the fourth quarter and expects similar performance all through this year. Netflix's revenues came in at $8.83 billion, higher than $7.85 billion in the year-ago period. Similarly, the company's net quarterly income was $937.8 million, up from $55.3 million in the year-ago quarter.

Income improved considerably due to an uptick in subscriptions. Netflix added 13.1 million subscribers in the fourth quarter, easily topping the 8.76 million subscriber growth in the third quarter. The company, at present, has 260.8 million paid membership adds, a new record, to say the least.

What's more, Netflix assumes its operating margins to improve this year. Thanks to such promising trends, Netflix's expected earnings growth rate for the current and next year is 40.7% and 21.9%, respectively. Its estimated revenue growth rate for the current and next year is 14.3% and 11.7%, respectively.

The Zacks Consensus Estimate for Netflix's current-year earnings has moved up 6% over the past 60 days. Additionally, Netflix has kept its operational expenses in check and garnered enough income from sales since the company has a net profit margin of 16%, more than the 10% mark, which is considered to be a healthy margin.

The company is using shareholders' equity to generate income quite resourcefully since it has a return on equity of 24.8%, and anything above the 20% mark is considered to be good.

Currently, Netflix has a Zacks Rank #1 (Strong Buy) and a Growth Score of B, a combination that offers the best opportunities in the growth investing space. Its shares have already outperformed the broader S&P 500 in the year-to-date period (+19.8% versus +6.4%). You can see the complete list of today's Zacks Rank #1 stocks here.

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Past performance is no guarantee of future results. Inherent in any investment is the potential for loss. This material is being provided for informational purposes only and nothing herein constitutes investment, legal, accounting or tax advice, or a recommendation to buy, sell or hold a security. No recommendation or advice is being given as to whether any investment is suitable for a particular investor. It should not be assumed that any investments in securities, companies, sectors or markets identified and described were or will be profitable. All information is current as of the date of herein and is subject to change without notice. Any views or opinions expressed may not reflect those of the firm as a whole. Zacks Investment Research does not engage in investment banking, market making or asset management activities of any securities. These returns are from hypothetical portfolios consisting of stocks with Zacks Rank = 1 that were rebalanced monthly with zero transaction costs. These are not the returns of actual portfolios of stocks. The S&P 500 is an unmanaged index. Visit https://www.zacks.com/performance for information about the performance numbers displayed in this press release.

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Bank of America Corporation (BAC) : Free Stock Analysis Report

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

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

Warner Bros. Discovery, Inc. (WBD) : Free Stock Analysis Report

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