Zacks Thematic Screens lets you dive into 30 dynamic investment themes shaping the future. Whether you’re interested in cutting-edge technology, renewable energy, or healthcare innovations, our themes help you invest in ideas that matter to you.
For those interested in viewing the Thematic lists, please click here >>> Thematic Screens – Zacks Investment Research.
Let’s take a closer look at the ‘Streaming Content’ theme and analyze a few stocks within.
Streaming Content
Streaming content is an audio or video file on the Internet that can be played without being fully downloaded, significantly reducing wait times for online content.
The content creation layer forms the streaming ecosystem’s foundation, typically comprising four categories: film and TV studios, live media producers, game publishers and developers, and user-generated content.
The push for exclusivity on subscription video-on-demand and music platforms has intensified the content wars, forcing streaming firms to spend exorbitant amounts on content creation.
Netflix Earnings Loom
As expected, streaming titan Netflix (NFLX – Free Report) , a current Zacks Rank #2 (Buy), is a stock the screen returned. The company is actually on the reporting docket this week, reflecting one of the period’s most notable quarterly releases.
Stay up-to-date with all quarterly releases: See Zacks Earnings Calendar.
As usual, subscriber metrics will be key in the upcoming Netflix release, though it’s critical to note that the company will no longer report quarterly membership numbers starting next year in 2025 Q1. Nonetheless, the Zacks Consensus Estimate for Subscriber Additions stands at 4.7 million, well below the 8.7 million reported in the same period last year.
Netflix has consistently blown away consensus Subscriber Addition estimates in recent periods, as shown below.
Image Source: Zacks Investment Research
Big growth is expected to be delivered, with our consensus expectations alluding to a 36% pop in EPS on 14% higher sales. Ad-supported membership tiers paired with a password-sharking crackdown have provided considerable benefits for the streaming titan, and the same looks to be present in the Q3 releases.
The revisions trend for the quarter reflects positivity, with the $5.09 per share expected being revised higher just over the last week.
Image Source: Zacks Investment Research
A positive development within the company has been margin expansion, leading to higher profits over recent periods. As shown below, margins bottomed in late 2022, reversing course entirely since. Please note that the chart below is on a trailing twelve-month basis.
Image Source: Zacks Investment Research
Shares aren’t expensive on a historical basis heading into the release, with the current 32.3X forward 12-month earnings multiple well beneath five-year highs of 98.4X and a 34.1X five-year median. And the current PEG ratio works out to 1.2X, again well below five-year highs and the five-year median.
Shares are heading into the release with notable momentum, and a favorable guide could easily continue driving shares higher given the current valuation.
Roku Continues Momentum
Roku, a current Zacks Rank #2 (Buy), is the leading TV streaming platform provider in the United States based on hours streamed. The company has reported over 60 million active accounts attributed to the sale of stand-alone streaming devices and partners with TV brands TCL, JVC, Sharp, and others.
The revisions trend for its current fiscal year has been notably bullish, as shown below.
Image Source: Zacks Investment Research
Roku’s latest set of quarterly results overall reflected healthy trends, with the company growing Streaming Households by 14% and Streaming Hours by 20% year-over-year. Impressively, Roku remains the #1 selling TV OS in the U.S., Canada, and Mexico.
The company’s top line strength is expected to continue, with consensus expectations for its current fiscal year suggesting 14% growth year-over-year. The stock sports a Style Score of ‘A’ for Growth.
Below is a chart illustrating the company’s sales on a quarterly basis.
Image Source: Zacks Investment Research
Bottom Line
Zacks Thematic Screens lets you dive into 30 dynamic investment themes shaping the future. Whether you’re interested in cutting-edge technology, renewable energy, or healthcare innovations, our themes help you invest in ideas that matter to you.
Upon running the Zacks Streaming Content Thematic screen, two buy-rated stocks – Netflix (NFLX – Free Report) and Roku (ROKU – Free Report) – were returned.
