Netflix Tops Earnings Estimates, Analysts React

October 17, 2016 -- Shares of Netflix (NFLX) were soaring by 19.5% to $119.26 in after-hours trading on Monday, as the company posted 2016 third-quarter earnings results after the close that beat expectations. The video streaming giant posted earnings of 12 cents per share on revenue of $2.29 billion. Analysts projected earnings of 6 cents per share on revenue of $2.28 billion.

In response to Netflix beating earnings expectations for the 2016 third quarter, analysts deliberated about what it signifies for the company moving forward during CNBC's "Closing Bell."

"I love it; People don't understand that if you spend money on making a TV show, or a movie it's not like you have spent the money, you have invested it. So it's going to stay on Netflix forever, we want original programming. The programming is amazing and proved that this quarter," Gerber Kawasaki Wealth and Investment Management CEO Ross Gerber said.

He went on to say that if you're on the sidelines with this company, you are missing out on "one of the greatest stories" of the next 10 years.

"This is a pleasant surprise, but you shouldn't be that surprised. This is a quality company on the right side of a trend and you really can't take that for granted," Firsthand Capital Management chief investment officer Kevin Landis noted.

These "pops" tend to happen with a company is as well-positioned as Netflix, he added.

Taking a more cautious outlook, FBR Capital senior research analyst Barton Crockett believes Netflix could still hold a lot of volatility.

"The thing that is clear with Netflix is that their subscriber growth is slowing. They are adding fewer subscribers this year than they were last year, so I think you have to be careful with this stock. Yeah, it's a great business, with a great trajectory, but it's slowing. With a growth stock like this that isn't making much money, it is a volatile beast when starting to slow," he explained.

Separately, TheStreet Ratings team rates the stock as a "hold" with a ratings score of C+.

Netflix's strengths such as its robust revenue growth, expanding profit margins and largely solid financial position with reasonable debt levels by most measures are countered by weaknesses including a generally disappointing performance in the stock itself, disappointing return on equity and weak operating cash flow.

TheStreet Ratings objectively rated this stock according to its "risk-adjusted" total return prospect over a 12-month investment horizon. Not based on the news in any given day, the rating may differ from Jim Cramer's view or that of this article's author.

By Giovanni Bruno

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