Netflix, Roku, Entravision Communications and Cumulus Media
For immediate release
Chicago, IL – October 21, 2021 – Zacks.com announces the list of stocks featured on the Analysts Blog. Every day, Zacks Equity Research analysts discuss the latest news and events impacting stocks and financial markets. Recent stocks featured in the blog include: Netflix, Inc. NFLX, Roku, Inc. ROKU, Entravision Communications Corp. EVC and Cumulus Media Inc. CMLS.
Here are highlights from Wednesday’s analyst blog:
Strong third quarter makes Netflix expensive: 3 low-cost media choices
Netflix recently had a fascinating third quarter as it saw a sharp rise in profits as well as subscriber additions. Bullish sentiment regarding the company’s performance heading into the third quarter has increased, with many analysts raising their price targets for the streaming giant.
The popularity of Netflix’s drama from South Korea – Squid Game – helped the company add more subscribers in the third quarter than expected. Citing a MarketWatch article, per FactSet, Netflix added 4.4 million new subscribers in the third quarter, beating its own forecast of 3.5 million and beating the average analyst projection of 3.78 million.
As many as 142 million households around the world have watched the hit series since its debut on September 15, as mentioned in the MarketWatch article. Now, Squid Game is the most watched new show in Netflix history. Other programs have also helped Netflix attract more subscribers. Among them are “The Chestnut Man”, “Money Heist” and “Sex Education“, to name a few. It’s also worth noting that the Asia-Pacific region turned out to be the biggest contributor to Netflix membership growth in the third quarter.
Netflix, by now, has been able to maintain an edge over rivals like Comcast, Walt Disney, Apple, AT&T, and Amazon in the streaming space. Additionally, the company now expects an additional 8.5 million customers to sign up for its programs in the last three months of this year, more than Wall Street’s estimate of 8.41 million. new subscribers during said period, by FactSet, as mentioned in Investor. com article.
Netflix, nonetheless, had earned $ 1.45 billion or $ 3.19 per share in the third quarter, down from $ 1.74 per share compared to the same period a year ago, per FactSet, as reported in the MarketWatch article. Likewise, the article noted that revenue stood at $ 7.48 billion in the third quarter, compared to $ 6.44 billion in the previous year period.
So strong third-quarter results helped Netflix shares rise 0.2% on October 19, while the company closed at $ 639 during the trading session. Regardless, shares of Netflix have been in tears lately, rallying 34% from their 2021 low in May, as quoted in a livemint article.
Several analysts have further raised the company’s price target, expecting encouraging third quarter results as well as expectations for further growth in subscribers in the current quarter. For example, Evercore ISI’s Mark Mahaney and Morgan Stanley analyst Benjamin Swinburne raised Netflix’s price target for this year, capitalizing on a list of new series slated for release in Q4.
However, from an investment perspective, Netflix is already very expensive and a further price hike could put a hole in the pockets of small investors. Let’s not forget that Netflix has a price / earnings (P / E) ratio of 61.32, well above the industry average of 15.17. Therefore, it is prudent for investors to invest in low-cost media companies with superb growth potential. We have therefore selected three of these stocks that display a Zacks Rank # 1 (Strong Buy) or 2 (Buy).
Roku operates a TV streaming platform. The stock currently has a Zacks Rank # 1. Zacks’ consensus estimate for current year earnings has risen 22.9% in the past 60 days. The expected profit growth of the company for the current year is 1,057.14%. Roku closed at $ 344.45 on October 19, well below Netflix’s settlement price. You can see The full list of today’s Zacks # 1 Rank stocks here.
Entravision Communication operates as a worldwide media, marketing and technology company. The company operates through three segments: Television, Radio and Digital. The stock currently has a Zacks Rank # 2. Zacks’ consensus estimate for current year earnings has risen 10.8% in the past 60 days. The company’s expected profit growth for next year is nearly 22%. Entravision Communications closed at $ 7.65 on October 19.
Cumulus Media is an audio-focused media and entertainment company. The stock currently has a Zacks Rank # 2. Zacks’ consensus estimate for next year’s profits has risen 1.8% in the past 60 days. The expected profit growth of the company for the current year is 77.2%. Cumulus Media closed at $ 12.77 on October 19.
Zacks investment research
800-767-3771 ext 9339
Past performance is no guarantee of future results. The potential for loss is inherent in any investment. This material is provided for informational purposes only and nothing herein constitutes investment, legal, accounting or tax advice, or a recommendation to buy, sell or hold any security. No recommendation or advice is given as to whether an investment is suitable for a particular investor. It should not be assumed that any investment in any identified and described securities, companies, sectors or markets was or will be profitable. All information is current as of the date hereof and is subject to change without notice. The views or opinions expressed may not reflect those of the company as a whole. Zacks Investment Research does not engage in investment banking, market making or securities asset management activities. These returns come from hypothetical portfolios composed of stocks with a Zacks rank = 1 that have been rebalanced monthly without any transaction costs. These are not the returns of actual equity portfolios. The S&P 500 is an unmanaged index. Visit https://www.zacks.com/performance for more information on the performance numbers displayed in this press release.
Want the latest recommendations from Zacks Investment Research? Today you can download 7 best stocks for the next 30 days. Click to get this free report