Ought to You Purchase Netflix ETFs Forward of This fall Earnings?

Netflix NFLX is about to launch fourth-quarter 2024 outcomes on Jan. 21 after market shut. It’s value having a look on the fundamentals of the world’s largest video-streaming firm forward of its outcomes.

See the Zacks Earnings Calendar to remain forward of market-making information.

Netflix shares have risen 11% prior to now three months, outperforming the broader business’s rise of 5.5% in the identical timeframe. The sturdy pattern will probably proceed, on condition that Netflix has an affordable likelihood to beat this earnings season.

Picture Supply: Zacks Funding Analysis

Consequently, ETFs with the biggest allocation to this streaming large like MicroSectors FANG+ ETN FNGS, Invesco Subsequent Gen Media and Gaming ETF GGME, First Belief Dow Jones Web Index Fund FDN, FT Vest Dow Jones Web & Goal Earnings ETF FDND and Communication Companies Choose Sector SPDR Fund XLC are in focus.

Earnings Whispers

Netflix has an Earnings ESP of +0.19% and a Zacks Rank #3 (Maintain). In keeping with our methodology, the mix of a optimistic Earnings ESP and a Zacks Rank #1 (Robust Purchase), 2 (Purchase) or 3 will increase the probabilities of an earnings beat. You’ll be able to uncover the perfect shares to purchase or promote earlier than they’re reported with our Earnings ESP Filter.

The net video-streaming large noticed unfavorable earnings estimate revision of a penny over the previous seven days for the to-be-reported quarter. Nevertheless, Netflix is anticipated to report stable earnings progress of 98.6% and substantial income progress of 14.5% for the to-be-reported quarter. The corporate’s earnings shock historical past is spectacular, because it delivered an earnings shock of 5.73%, on common, over the previous 4 quarters. Netflix additionally belongs to a top-ranked Zacks business (positioned on the top 16% of 250+ industries).

Netflix, Inc. Worth, Consensus and EPS Shock

Netflix, Inc. price-consensus-eps-surprise-chart | Netflix, Inc. Quote

What Ought to You Watch?

Analysts are bullish on Netflix, with a median brokerage advice (ABR) of 1.91 made by 41 brokerage companies. Out of them, 23 are Robust Purchase and two are Purchase. Robust Purchase and Purchase, respectively, account for 56.1% and 4.88% of all suggestions. The common value goal for Netflix involves $889.81, ranging vary from a low of $650.00 to a excessive of $1,100.00. Over the previous week, one analyst, BMO Capital, raised the worth goal on Netflix to $1,000 from $825 whereas sustaining an Outperform ranking, signaling confidence within the firm’s future efficiency.

The streaming large expects fourth-quarter revenues to develop 15% yr over yr. Netflix expects greater subscriber additions within the fourth quarter in comparison with final yr because of a powerful content material slate. Bloomberg Intelligence expects fourth-quarter subscriber additions to double from the third quarter, given the discharge of the content material, together with stay NFL video games and “Squid Recreation” Season 2.

For the complete yr, revenues are anticipated to develop on the greater finish of the earlier 14-15% year-over-year progress steerage.

Valuations

Netflix shares look costly at present ranges, with a P/E ratio of 36.70 versus 10.86 for the business. Nevertheless, it has a powerful Progress Rating of A, indicating that it’s primed for extra progress. This justifies its excessive valuation.

ETFs in Focus

MicroSectors FANG+ ETN (FNGS)

MicroSectors FANG+ ETN is linked to the efficiency of the NYSE FANG+ Index, which is an equal-dollar-weighted index. It’s designed to offer publicity to a gaggle of extremely traded progress shares of next-generation expertise and tech-enabled corporations. It holds 10 shares in its basket in equal proportion, with Netflix’s share coming in at 10% (learn: Can “Magnificent Seven” ETFs Retain Their Glory in 2025?).

MicroSectors FANG+ ETN has accrued $427.9 million in its asset base and costs 58 bps in annual charges. It trades in a reasonable quantity of 121,000 shares a day on common and has a Zacks ETF Rank #3.

Invesco Subsequent Gen Media and Gaming ETF (GGME)

Invesco Subsequent Gen Media and Gaming ETF gives publicity to corporations with important publicity to applied sciences or merchandise that contribute to future media by direct revenues. It tracks the STOXX World AC NexGen Media Index, holding 87 shares in its basket. Netflix is the fourth agency, accounting for 7.7% of the GGME belongings.

Invesco Subsequent Gen Media and Gaming ETF has amassed $34.3 million in its asset base and costs 61 bps in annual charges. It trades in common each day quantity of 6,000 shares and has a Zacks ETF Rank #3.

First Belief Dow Jones Web Index Fund (FDN)

First Belief Dow Jones Web Index Fund follows the Dow Jones Web Composite Index, giving traders publicity to the broad Web business. It holds about 41 shares in its basket, with Netflix occupying the third spot at 7.6%.

First Belief Dow Jones Web Index Fund is the most well-liked and liquid ETF within the broad expertise house, with AUM of $6.7 billion and a median each day quantity of round 366,000 shares. FDN costs 51 bps in charges per yr and has a Zacks ETF Rank #1 with a Excessive threat outlook (learn: 4 Best-Performing ETF Areas of Q4 That Still Show Promise).

FT Vest Dow Jones Web & Goal Earnings ETF (FDND)

FT Vest Dow Jones Web & Goal Earnings ETF is an actively managed fund that invests primarily in U.S. exchange-traded fairness securities meant to trace the Dow Jones Web Composite Index. It utlizes an “possibility technique” consisting of writing (promoting) U.S. exchange-traded name choices on the Nasdaq-100 Index, or ETFs that monitor the Nasdaq-100 Index. It holds 42 shares in its basket, with Netflix occupying the third place at 7.65 share.

FT Vest Dow Jones Web & Goal Earnings ETF has accrued $2.3 million in its asset base and trades in a median each day quantity of about 2,000 shares. It costs 75 bps in annual charges.

Communication Companies Choose Sector SPDR Fund (XLC)

Communication Companies Choose Sector SPDR Fund gives publicity to corporations from telecommunication companies, media, leisure and interactive media & companies and has accrued $20.5 billion in its asset base. It follows the Communication Companies Choose Sector Index and holds 22 shares in its basket, with Netflix occupying the fourth place at 6.4% share. About 41% of the portfolio is allotted to interactive media & companies, whereas leisure and media spherical off the subsequent two.

Communication Companies Choose Sector SPDR Fund costs 9 bps in annual charges and trades in a median each day quantity of 4 million shares. It has a Zacks ETF Rank #1.