Netflix, Inc.
This company continues to expand its market share by successfully mixing Hollywood with nearly next day delivery.
Netflix, Inc. (NFLX) is the world's largest online movie rental service. The company has more than seven million subscribers which have access to more than 90,000 DVD titles plus a library of more than 7,000 choices that can be watched instantly on their PCs.
The company offers nine subscription plans, with the cheapest starting at $4.99 per month. Netflix's selling strategy is that there are no due dates and it never charges late fees.
DVDs are delivered free to subscribers by first class mail, with a postage-paid return envelope, from over 100 U.S. shipping points. About 95% of Netflix's customer base lives in areas that can be reached via delivery within one business day.
The company is seeing a surge in its subscriber base and is really executing on its expansion strategy. On Feb 27, Netflix announced revised guidance for the first quarter and for full year 2008.
NFLX increased the range of subscribers to 8.16 million to 8.26 million, up from 7.85 million to 8.05 million. Netflix increased the revenue range to $324 to $328 million, from $323 million to $328 million. The range on earnings per share for the quarter also rose to 15 to 22 cents from 13 to 21 cents per share.
For the full year 2008, the company raised guidance for the range of subscribers from 8.9 million to 9.5 million, up from 8.4 million to 8.9 million. Revenue is projected to increase to the range of $1.345 billion to $1.385 billion from $1.3 billion to $1.35 billion. The range on earnings per share rose to $1.18 to $1.30 per share from $1.12 to $1.24 per share.
Brokerage analysts' responded to the company's guidance by raising estimates for the first quarter and the full year 2008. For the quarter, five out of nine covering analysts raised by one cent to 21 from 20 cents per share. For the year, six out of seven analysts raised by an average of nine cents to $1.26 from $1.17.
The company also announced on March 6 that the Board of Directors authorized a $150 million stock repurchase program through the end of 2008. This comes on the heels of the $100 million repurchase program authorized in January, which the company already completed by buying back approximately 3.8 million shares of common stock.
Netflix, a Zacks #1 Rank (Strong Buy), has a 2008 P/E of 25.15 and a PEG of 1.57. The company surprised on fourth-quarter earnings by eight cents, or 57.14%, reporting 22 cents compared to analysts' estimates of 14 cents per share.
Lower Target Price on ValueClick
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