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ovenerio
Omar Venerio
Articles (1736) 

2 Stocks to Watch Wednesday

Shares of Netflix up, J.B. Hunt Transport Services down

January 20, 2021 | About:

Netflix

Shares of Netflix, Inc. (NASDAQ:NFLX) rose more than 14% after the company posted its fiscal fourth-quarter results yesterday. Revenue grew 21.4% from the prior-year quarter to $6.64 billion, beating estimates by $20 million. The company earnings per share of $1.19, falling short of analysts' estimations by 20 cents.

Further, the company added 8.51 million new subscribers versus 6.03 million expected, and it crossed the 200 million paid memberships mark.

In the quarter, the average paid streaming memberships rose 23% year over year, while average revenue per membership was flat year over year, both on a reported and foreign exchange neutral basis.

The profitability growth was reflected in the operating margin of 18%, up 5 percentage points over prior year. For fiscal 2021, the company expects a 20% operating margin, up 2 percentage points from 2020 and higher than the previous forecast of 19%.

Looking at cash generation, Netflix generated cash from operating activities of -$138 million versus -$1.5 billion in the prior-year period. The free cash flow was -$284 million versus -$1.7 billion in the same quarter of 2019, but the full-year 2020 free cash flow reached $1.9 billion versus -$3.3 billion in 2019. The company plans to return cash to shareholders through ongoing stock buybacks, as it did in the period 2007 to 2011.

During the quarter ended Sept. 30, Mario Gabelli boosted his holding in the stock by 5% to 16,993 shares. Ken Fisher (Trades, Portfolio) boosted his holding 4% to 3,531,546 shares. Joel Greenblatt (Trades, Portfolio) and Steve Mandel (Trades, Portfolio) were more bullish on the stock with increases of 33% and 40%, respectively. David Tepper cut his investment by 43% to 131,500 shares.

J.B. Hunt Transport Services

Shares of J.B. Hunt Transport Services, Inc. (NASDAQ:JBHT) fell almost 3% on Wednesday morning after reporting fourth quarter revenue of $2.74 billion, up 11.8% year-over-year, which beat estimates by $160 million.

In the quarter, revenue growth was fueled by the Integrated Capacity Solutions (ICS) and Truck (JBT) segments, which grew 56% and 50%, respectively. Final Mile Services (FMS) revenue increased almost a third, and the Dedicated Contract Services (DCS) revenue rose 3%.

Moreover, the operating income reached $207.7 million, higher than $205.1 million in the same quarter of 2019.

During the quarter, there were cost increases in rail and third-party transportation costs, as well as investments in technology or salaries and wage expenses for non-driving workers.

By segment, the Intermodal (JBI) segment revenue in the quarter reached $1.25 billion, down 1% year-over-year, and the operating income was $110.8 million, down 16%. Dedicated Contract Services (DCS) segment revenue totaled $568 million, up 3%, and the operating income was$77.6 million, up 4%. Integrated Capacity Solutions (ICS) revenue was $587 million, up 56%, and the operating income was $5.6 million, which was higher than a loss of $11.8 million in the fourth quarter of 2019. The Final Mile Services (FMS) revenue was $213 million, up 30%, with operating income increasing to $5.5 million, a gain of 12%.The Truck (JBT) segment had reported revenue of $140 million, up 50%, with an operating income of $8.4 million, up 32%.

The company repurchased 144,000 shares of common stock for $17 million. At the end of 2020, it had approximately $503 million remaining under the share repurchase authorization.

At the end of September, Joel Greenblatt (Trades, Portfolio) boosted his holding in the stock to 62,275 shares.

Disclosure: The author holds no position in any stocks mentioned

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About the author:

Omar Venerio
Omar Venerio is a capital markets, derivatives, corporate finance and financial management professor and Area Head of Finance. He is passionate about the stock market and providing independent fundamental research and hedge fund and insider trading-focused investigation.

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