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4 Streaming Stocks That Could Outperform Netflix in 2021

Netflix (NFLX) has been dominating the streaming video market for a long time. However, the easy days of no competition have gone by as traditional media companies like Walt Disney (DIS), AT&T (T), Comcast (CMCSA), and AMC Networks (AMCX) have launched their personal streaming services.

Stay-at-home orders during the coronavirus pandemic this year have bolstered businesses for major streaming service providers in addition to the wave of cord-cutting. Being the dominant player in the streaming space, Netflix, Inc. (NFLX) thrived and delivered record revenues and profits in the recent quarters. However, the company has been facing a potential shortage of films and movies as production remained suspended.

As many popular series is stalled and new shows have been canceled, NFLX is expecting a slow subscriber growth in the upcoming months.

The competition is only going to get more intense as traditional media companies such as Walt Disney Company (DIS), AT&T, Inc. (T), Comcast Corporation (CMCSA) and AMC Networks, Inc. (AMCX) are all launching their own streaming services. With newer and more diverse show portfolios, these companies are well-positioned to outperform NFLX in the upcoming months.

Walt Disney Company (DIS)

Before the pandemic hit, DIS primarily operated in the field of Studio Entertainment and theme parks. However, since the beginning of 2020, the entertainment giant focused on developing its streaming platform as the global economy shut down. The company launched Disney+ last November, which has proven to be a major source of revenue since then.

Disney+ subscriber base hit 60 million earlier this year in August, in less than a year from its launch. On October 13th, DIS announced a strategic restructuring of its entertainment business, emphasizing curating original content for its streaming platform. Given the massive success of Disney+ to date, this strategic plan could accelerate their direct-to-consumer business while effectively supporting their growth strategy.

DIS’s broadcasting revenue for the third quarter ended June 2020 increased12.4% year-over-year to $2.53 billion. Direct-to-Consumer & International revenues increased 2.4% year-over-year to $3.97 billion for the quarter. Segment operating income from the media network grew 47.6% from the prior-year quarter to $3.15 billion.

The consensus EPS estimate of $2.60 for the next year indicates a 63.5% improvement year-over-year. Moreover, DIS beat the street EPS estimates in three out of the trailing four quarters, which is impressive. The consensus revenue estimate of $71.05 billion for 2021 indicates a 9.6% increase year-over-year.

The stock has gained 21.2% over the past six months. Under our  POWR Ratings system, DIS has been accorded an “A” rating for Peer Grade. In the15-stock Entertainment-Sports & Theme Parks industry, it’s ranked #1.

AT&T, Inc. (T)

T is a leading telecommunications company providing mobile and fixed telephone services across the United States. The company operates in three segments — WarnerMedia, Communications, Latin America, and Xandr. It produces television programming, video and audio programming services, pay-TV services, and digital and video advertising services.

On November 2nd, T sold its wireline as well as wireless operations in Puerto Rico and the U.S. Virgin Islands to Liberty Latin America for $1.95 billion. Moreover, T has recently announced a discount on the wireless service for its internet users that would be available from December 31st. Given the surging demand for home internet as the work-and-learn-home is expected to make a comeback with the second wave, T is expected to witness an increase in user base, and thereby revenues.

T’s third quarter (ended September 2020) revenue increased 3.4% sequentially to $42.34 billion. Operating income grew 73.6% sequentially to $6.13 billion. The consensus EPS of $3.22 for the next year indicates a slight rise year-over-year. Analysts expect the company’s revenue to increase by 1.6% next year to $173.38 billion.

T has gained 6.2% since hitting its 52-week low of $26.08 in March. T has a grade of “B” in Industry Rank in our POWR Ratings system. It is also ranked #7 out of 25 stocks in the Telecom - Domestic industry.

Comcast Corporation (CMCSA)

CMCSA is a leading telecommunications conglomerate, producing feature films and television programs. It is the largest cable TV company in the United States. It also owns and operates Theme Parks, Sky segments, Broadcast Television and Filmed Entertainment.

CMCSA has recently partnered with Aruba for launching Comcast Business Teleworker VPN. This would ensure enterprise employees a secure connection to their corporate networks that do not interfere with their at-home internet.

CMCSA’s third quarter ended September 2020 revenue rose 7.7% sequentially to $25.53 billion. Adjusted EBITDA for Cable Communications increased 10.5% year-over-year to $6.41 billion. Total High-Speed Internet Customers increased by 6.7% year-over-year to 30.06 million in the third quarter.

The consensus EPS estimate of $2.87 for the next year indicates a 14.3% improvement year-over-year. CMCSA has an impressive earnings surprise history as well, as it beat the street EPS estimates in each of the trailing four quarters. The consensus revenue estimate of $110.66 billion for the next year indicates a 7.8% improvement from the same period last year.

The stock has gained 20.7% over the past six months. CMCSA’s strong fundamentals are reflected in its POWR Ratings. It has an overall rating of “Buy” with a “B” in Trade Grade, Buy & Hold Grade, Peer Grade, and Industry Rank. It is also ranked #1 out of 14 stocks in the Entertainment – TV & Internet Providers industry.

AMC Networks Inc. (AMCX)

AMCX is an entertainment company that operates worldwide through cable channels like BBC America, AMC, Sundance TV, We TV, and IFC. It owns independent film companies like RLJE Films and IFC Films. The company also operates in premium streaming services such as Sundance Now and Shudder.

Earlier this year, AMCX announced a long-term distribution partnership with DISH Network and Sling TV which is expected to increase its subscription base.

AMCX’s revenue grew 9% year-over-year to $199.29 million in the third quarter ended September 2020 under the international and other segments. Adjusted operating income increased 107% from the year-ago value to $27.87 million, for the same segment, while EPS rose 306.9% sequentially to $1.18.

The consensus EPS estimate of $7.43 for the next year indicates a 30.8% increase year-over-year. The consensus revenue estimate of $2.79 billion for the next year indicates a slight improvement from the same period last year. AMCX has gained 18.1% since hitting its 52-week low of $19.62 in March. 

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NFLX shares were trading at $518.00 per share on Thursday afternoon, up $21.05 (+4.24%). Year-to-date, NFLX has gained 60.09%, versus a 10.77% rise in the benchmark S&P 500 index during the same period.



About the Author: Imon Ghosh

Imon is an investment analyst and journalist with an enthusiasm for financial research and writing. She began her career at Kantar IMRB, a leading market research and consumer consulting organization.

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