The streaming industry is experiencing rapid growth, driven by the increasing adoption of digital content consumption. So, investors could scoop up shares of key players like Netflix, Inc.(NFLX), Disney (DIS), and Roku (ROKU), which are capitalizing on the rising demand.
As consumers shift away from traditional cable services and embrace digital platforms, the market is poised for expansion, fueled by subscription-based models, a diverse content offering, and the growing popularity of streaming services across various regions. As a result, the global Video Streaming (SVoD) market is projected to reach $137.70 billion by 2027, exhibiting a robust CAGR of 8.3%.
Further, the streaming market is bolstered by the rise of digital entertainment, online gaming communities, and the shift toward remote work and social distancing. As people increasingly turn to streaming for both entertainment and social interaction, this trend is expected to continue globally, reflecting changing lifestyles and cultural norms.
The streaming market’s user base is forecasted to reach 0.8 billion by 2029, with user penetration growing from 10.2% in 2024 to 12.2% by 2029. The industry’s ARPU stands at approximately $0.2, highlighting the expansive reach and financial potential of the streaming sector as consumer demand surges.
Considering these conducive trends, let’s examine the Streaming stocks in detail.
Netflix, Inc. (NFLX)
NFLX is a global entertainment service provider offering a wide range of TV series, documentaries, feature films, and games across diverse genres and languages. Catering to audiences in over 190 countries, NFLX also delivers streaming content accessible on various internet-connected devices, including TVs, mobile devices, and set-top boxes.
During the fiscal third quarter that ended September 30, 2024, NFLX’s total revenue increased 15% year-over-year to $9.83 billion. Its operating income grew 51.8% from the year-ago value to $2.91 billion. In addition, the company’s net income and EPS came in at $2.36 billion and $5.40, up 41% and 44.8% over the prior-year quarter, respectively.
Analysts expect NFLX’s EPS and revenue for the fourth quarter ended on December 31, 2024, to increase 100.1% and 14.8% year-over-year to $4.22 and $10.14 billion, respectively. It surpassed the Street revenue estimates for all four quarters, which is promising.
Over the past year, the stock has gained 79.5% to close the last trading session at $780.21. It soared 60.3% year-to-date.
NFLX’s POWR Ratings reflect its robust outlook. The stock has an overall rating of B, equating to a Buy in our proprietary rating system. The POWR Ratings are calculated by considering 118 distinct factors, with each factor weighted to an optimal degree.
NFLX has a B grade in Sentiment and Quality. It is ranked #19 out of 52 stocks in the A-rated Internet industry.
Beyond what we have stated above, we also have given NFLX grades for Growth, Momentum, Value, and Stability. Get all the NFLX’s ratings here.
The Walt Disney Company (DIS)
DIS is a global entertainment leader with segments in Entertainment, Sports, and Experiences. Through brands like Disney, Marvel, and ESPN, and streaming platforms such as Disney+ and Hulu, Disney delivers diverse content, operates theme parks, and licenses merchandise worldwide.
It pays an annual dividend of $0.90, which translates to a dividend yield of 0.9% at the prevailing price levels.
In the fiscal third quarter ended June 29, 2024, DIS’s total revenues increased 4% year-over-year to $23.16 billion. Its income before income taxes was recorded at $3.09 billion, compared to a loss of $134 million in the same quarter the last year. Moreover, it reported an adjusted EPS of $1.39, up 35% from the prior-year quarter.
Street expects DIS’s revenue and EPS for the fourth quarter ended September 30, 2024, to increase 5.9% and 35.1% year-over-year to $22.49 billion and $1.11, respectively.
The stock climbed 9.5% year-to-date and has returned 17.7% over the past year to close the last trading session at $98.89.
DIS’s POWR Ratings reflect strong prospects.
It has a B for Growth and Sentiment. It is ranked #7 out of 12 stocks in the Entertainment - Media Producers industry.
To access DIS’s Value, Momentum, Stability, and Quality ratings, click here.
Roku, Inc. (ROKU)
ROKU operates a TV streaming platform, offering digital advertising and streaming services through its Platform segment and selling streaming players, Roku TVs, and smart home products through its Devices segment.
On Oct. 9, 2024, Maplebear Inc. (CART) and ROKU expanded their partnership to make TV viewing more interactive and shoppable for high-intent audiences. Through enhanced ad targeting and closed-loop measurement, CPG advertisers will have a better reach to relevant consumers, streamlining personalized shopping experiences directly from TV.
ROKU’s total net revenue increased 16.5% year-over-year to $1.06 billion in the fiscal 2024 third quarter that ended on September 30, 2024. Its total gross profit came in at $480.1 million, up 30.2% year-over-year, while its free cash flow grew 56.1% from the year-ago value to $157.35 million.
Street expects ROKU’s revenue for the fiscal fourth quarter (ending December 31, 2024) to increase 15.9% year-over-year to $1.14 billion. Its EPS for the same quarter is expected to grow 22.4% from the prior year. In addition, it surpassed the consensus revenue estimates in each of the trailing four quarters.
Shares of ROKU have gained 19.8% over the past six months to close the last trading session at $72.27.
ROKU’s bright prospects are apparent in its POWR Ratings. The company operates within the B-rated Consumer Goods industry and is ranked #38 out of 56 stocks.
Click here to see ROKU’s ratings for Growth, Value, Stability, Sentiment, Momentum, and Quality.
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NFLX shares were trading at $785.36 per share on Thursday morning, up $5.15 (+0.66%). Year-to-date, NFLX has gained 61.30%, versus a 26.22% rise in the benchmark S&P 500 index during the same period.
About the Author: Kritika Sarmah
Her interest in risky instruments and passion for writing made Kritika an analyst and financial journalist. She earned her bachelor's degree in commerce and is currently pursuing the CFA program. With her fundamental approach, she aims to help investors identify untapped investment opportunities.
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