Netflix Earns 59 Cents a Share

Yesterday I said that Netflix (NFLX) was an awful stock to buy, and it looks like the market may finally be agreeing with me. The company reported outstanding quarterly results, but the stock is down in the after-hours market. I won’t say “I told you so” even though I, in fact, told you so.
The problem isn’t NFLX’s business which is doing extremely well. It’s that the valuation is so high, there’s almost nothing Netflix can do to justify the sky-high share price.
Let’s run through some of the numbers. After the bell, Netflix reported Q1 earnings of 59 cents a share, five cents more than Wall Street was expecting. In January, the company said to expect Q1 EPS between 47 and 58 cents, so they even beat their top-end. A year ago, they earned 37 cents a share. Revenues rose 25.3% to $493.7 million. What else can I say? Businesswise, this was an outstanding quarter.
For Q2, Netflix said to expect EPS between 62 and 73 cents. For all of 2010, they raised their EPS range from $2.28 to $2.50, to $2.41 to $2.63. That’s impressive but I’d hardly call it unexpected. This stock is still way, way WAY overpriced.
Netflix continues to be a Strong Sell.
Update: OK, now NFLX is up slightly after-hours.

Posted by Eddy Elfenbein on April 21st, 2010 at 4:41 pm

The information in this blog post represents my own opinions and does not contain a recommendation for any particular security or investment. I or my affiliates may hold positions or other interests in securities mentioned in the Blog, please see my Disclaimer page for my full disclaimer.