Netfix

Netflix (NFLX) Stock Higher Today on Move Into Japan Market

NEW YORK (TheStreet) -- Shares of Netflix (NFLX - Get Report) started the trading day up, higher by 1.21% to $454.13, after the company said late yesterday it will expand its streaming service into Japan this fall.

To facilitate close partnerships with consumer electronics makers, and to work with Japanese film and TV creators, Netflix will soon open a regional office in Tokyo, the company said.

Gregory K. Peters, chief streaming and partnerships officer at Netflix since 2013, has been promoted to general manager of Netflix Japan.

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In Japan, Netflix will have to compete against a "deep-pocketed" incumbent in telecom and media giant SoftBank Corp. (SFTBY) , the Wall Street Journal noted.

SoftBank has been making moves to expand its relationship with Hollywood, investing $250 million in Legendary Pictures last year and acquiring DramaFever Corp., an online distributor of South Korean soap operas and other international shows, the Journal said, adding late last year, SoftBank also launched a streaming service called BBTV Next in Japan.

TheStreet Ratings team rates NETFLIX INC as a Hold with a ratings score of C+. TheStreet Ratings Team has this to say about their recommendation:

"We rate NETFLIX INC (NFLX) a HOLD. The primary factors that have impacted our rating are mixed - some indicating strength, some showing weaknesses, with little evidence to justify the expectation of either a positive or negative performance for this stock relative to most other stocks. The company's strengths can be seen in multiple areas, such as its robust revenue growth, compelling growth in net income and expanding profit margins. However, as a counter to these strengths, we also find weaknesses including weak operating cash flow and generally higher debt management risk."

Highlights from the analysis by TheStreet Ratings Team goes as follows:

• The revenue growth came in higher than the industry average of 3.3%. Since the same quarter one year prior, revenues rose by 26.3%. Growth in the company's revenue appears to have helped boost the earnings per share.
• The net income growth from the same quarter one year ago has significantly exceeded that of the S&P 500 and the Internet & Catalog Retail industry. The net income increased by 72.2% when compared to the same quarter one year prior, rising from $48.42 million to $83.37 million.
• Compared to where it was a year ago today, the stock is now trading at a higher level, reflecting both the market's overall trend during that period and the fact that the company's earnings growth has been robust. We feel that the combination of its price rise over the last year and its current price-to-earnings ratio relative to its industry tend to reduce its upside potential.
• Despite currently having a low debt-to-equity ratio of 0.48, it is higher than that of the industry average, inferring that management of debt levels may need to be evaluated further. Despite the fact that NFLX's debt-to-equity ratio is mixed in its results, the company's quick ratio of 0.60 is low and demonstrates weak liquidity.
• Net operating cash flow has significantly decreased to -$38.46 million or 192.80% when compared to the same quarter last year. In addition, when comparing to the industry average, the firm's growth rate is much lower.