Earnings Update: Netflix, Inc. (NASDAQ:NFLX) Just Reported Its Second-Quarter Results And Analysts Are Updating Their Forecasts

Netflix, Inc. (NASDAQ:NFLX) shareholders are probably feeling a little disappointed, since its shares fell 2.2% to US$633 in the week after its latest second-quarter results. Netflix reported US$9.6b in revenue, roughly in line with analyst forecasts, although statutory earnings per share (EPS) of US$4.88 beat expectations, being 2.9% higher than what the analysts expected. Earnings are an important time for investors, as they can track a company's performance, look at what the analysts are forecasting for next year, and see if there's been a change in sentiment towards the company. So we gathered the latest post-earnings forecasts to see what estimates suggest is in store for next year.

View our latest analysis for Netflix

Taking into account the latest results, the most recent consensus for Netflix from 40 analysts is for revenues of US$38.7b in 2024. If met, it would imply an okay 6.6% increase on its revenue over the past 12 months. Statutory earnings per share are predicted to swell 15% to US$18.95. Yet prior to the latest earnings, the analysts had been anticipated revenues of US$38.7b and earnings per share (EPS) of US$18.42 in 2024. The analysts seems to have become more bullish on the business, judging by their new earnings per share estimates.

The consensus price target was unchanged at US$677, implying that the improved earnings outlook is not expected to have a long term impact on value creation for shareholders. The consensus price target is just an average of individual analyst targets, so - it could be handy to see how wide the range of underlying estimates is. There are some variant perceptions on Netflix, with the most bullish analyst valuing it at US$800 and the most bearish at US$500 per share. Analysts definitely have varying views on the business, but the spread of estimates is not wide enough in our view to suggest that extreme outcomes could await Netflix shareholders.

Looking at the bigger picture now, one of the ways we can make sense of these forecasts is to see how they measure up against both past performance and industry growth estimates. We can infer from the latest estimates that forecasts expect a continuation of Netflix'shistorical trends, as the 14% annualised revenue growth to the end of 2024 is roughly in line with the 12% annual growth over the past five years. By contrast, our data suggests that other companies (with analyst coverage) in a similar industry are forecast to see their revenues grow 8.3% per year. So it's pretty clear that Netflix is forecast to grow substantially faster than its industry.

The Bottom Line

The biggest takeaway for us is the consensus earnings per share upgrade, which suggests a clear improvement in sentiment around Netflix's earnings potential next year. Happily, there were no major changes to revenue forecasts, with the business still expected to grow faster than the wider industry. There was no real change to the consensus price target, suggesting that the intrinsic value of the business has not undergone any major changes with the latest estimates.

With that in mind, we wouldn't be too quick to come to a conclusion on Netflix. Long-term earnings power is much more important than next year's profits. At Simply Wall St, we have a full range of analyst estimates for Netflix going out to 2026, and you can see them free on our platform here..

It might also be worth considering whether Netflix's debt load is appropriate, using our debt analysis tools on the Simply Wall St platform, here.

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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.

Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team@simplywallst.com