As an internet television network, Netflix (NFLX, Financial) delivers TV shows and movies online. The company is part of the services sector and one of the most prominent corporations operating in the Cable Television (CATV) System Industry of the U.S. domestic and international streaming and its domestic DVD are the 3 segments wherein the company is currently operating. It caters to the needs of more than 57 million customers and is operating in approximately 50 countries worldwide. The company is headquartered in Los Gatos, California and was founded in 1997.
Financially the company is pretty strong. The revenues of the company have over the past 3 years continually increased. From $3,609,282,000 in 2012, the total sales revenues of the company increased to $5,504,656,000 in 2014. In 2013, a 21.20% and in 2014 a 25.20% increase in the total sales revenues of the company was recorded. The corresponding increase in the cost of sales was 17.54% and 20.39% respectively. The proportionate increase in the sales revenues has during the period, been greater than the proportionate increase in the cost of sales, which is a sign of the increasing efficiency of the company. The operating expenses of the company, however, increased by a substantial 31.12% vis-Ă -vis a 25.8% increase in the sales revenues. Nevertheless, the company is still earning great revenues, is profitable, and at the same time highly efficient.
The area wherein Netflix’s performance has greatly improved is its ability to convert revenues to profits. Net Income from $17,152,000 in 2012 increased to $266,799,000 in 2014. The increase in 2013 was of 555.33% and in 2014 137.36%. The company’s cash flow from operations, too, have increased greatly. In 2013, the company’s cash flows from operations increased by almost 353.22%. Its financial performance has really been splendid.
The current stock price of Netflix’s share is $554.03. In the past 52 weeks, the stock price has fluctuated between the ranges $552.26-$559.77. By the end of the current fiscal year, the company’s stock price is expected to increase to $564.00. In the past, 1.5 years the stock price increased from $409.33 to $557.03. The increase in the stock prices has been great. The upward trend is expected to persist resulting in huge capital gains for the investors. The book value per Netflix’s share is $31.49. The P/E ratio is 145.17, Price/Sales ratio is 5.81 and Price/Book ratio is 17.67. The company has performed really well in the past 1-2 years. The beta value of Netflix’s stock is quite high at 1.73. Systematic risks associated with the investment are high.
The key competitors of Netflix are Amazon.com Inc. (AMZN, Financial), Best Buy Co. Inc. (BBY, Financial) and Redbox Automated Retail, LLC. Although the revenues of Amazon are higher than that of Netflix, but the profitability of the latter is greater. If we compare the stock prices of Netflix with Amazon, we will find the former’s to be far greater than that of the latter.
Netflix’s financial performance has over the past 3 years remained great. The company has invariably grown. Sales revenues of the company and its ability to convert them to profits have been increasing at an impressive rate. The future prospects of the company seem great enough for investors to anticipate high rewards.
