Netflix Q3 2013 Earnings Report Analysis

Netflix Q3 2013 earnings report

Netflix (NASDAQ: NFLX) announced its Q3 2013 earnings report yesterday after market close. The company reported a solid quarterly performance with the business reporting positives in all indicators of business performance.

Netflix Q3 2013 Financial Performance

The company registered a revenue growth of 22% on a Y/Y basis. The operating income for the quarter came in at $57 million for Q3 2013 against $16 million in the year ago quarter. The operating margins improved by 3 percentage points to 5.2%. The quarter saw a strong growth in the earnings per share (EPS) with the EPS increasing 4 times as compared to the previous quarter. The overseas operations saw a strong growth in Q3 with the overseas revenue jumping by 135% Y/Y.

Actual v/s Estimates

The quarterly performance came ahead of the analyst expectations with the quarterly earnings of 52 cents beating the analyst consensus by 8.3% and the revenue of $1.11 billion marginally ahead of the $1.1 billion analyst consensus estimate.

Stock Market Response

The stock price of Netflix jumped 6.4% in regular hours trading in expectations of a good quarterly performance. The investors weren't disappointed by the performance of the company, a fact well reflected by the 11% jump in the stock price in after-hours trade, following the earnings call.


Though the quarterly performance has been a tremendous improvement over the year ago period, we believe that a P/E of close to 300 makes the stock very expensive and we wouldn't invest our money into a stock with such an exorbitant price. The company has been trading at a significant premium to its historical P/E ratio. The P/E ratio prior to 2013 was below 100 whereas the stock has been trading at a P/E in excess of 400 for most part of the current year. We believe the stock price has climbed far ahead of the earnings making the stock a risky bet at its current price levels.

To see Netflix’s current price, please click here: (NASDAQ: NFLX)

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Neither Amigobulls, nor any members of its staff hold positions in any of the stocks discussed in this post. The author may not be a certified/registered investment advisor, and the opinions expressed should not be treated as investment advice. Buying and selling of securities carries the risk of monetary losses. Readers/Viewers are advised to carry out their own due diligence and consult their investment advisors before making any investment decisions. Neither Amigobulls, nor the author have any business relationship with any of the companies covered in this post.

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Comments on this article and NFLX stock

Netflix was all pumped up by Carl Icahn. Now it has dropped a lot after he dumped it. These big guys suck.
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