ETFs To Win From The Netflix, Amazon Q3 Earnings Faceoff

The COVID-19 pandemic has made it difficult for companies to survive. In this environment, Netflix (NFLX - Free Report) and Amazon (AMZN - Free Report) are thriving given the acceleration in adoption of e-commerce, including remote working and digital entertainment.

This is because people are avoiding going out of their homes for fear of exposing themselves to the virus that has boosted demand for cloud computing, gaming, e-sports, streaming services and shopping. Netflix is the biggest beneficiary of the surge in demand for at-home entertainment while consumers flocked to Amazon for shopping coupled with leisure activity.

The two companies will report earnings this week. The world's largest video streaming company is slated to release on Oct 20 and the online e-commerce behemoth on Oct 22. According to our methodology, the combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 increases chances of an earnings beat. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

Both companies have reasonable chances of beating earnings estimates with Netflix witnessing positive earnings estimate revisions, which are generally a precursor to an earnings beat. On the other hand, Amazon saw negative earnings estimate revision.

Let’s delve into the earnings whisper for both the companies:

Netflix Versus Amazon

Netflix and Amazon has a Zacks Rank #3. The Earnings ESP is +2.14% for Netflix and +18.77% for Amazon.

The streaming giant saw positive earnings estimate revision of a penny over the past 30 days for the third quarter. Analysts raising estimates right before earnings — with the most up-to-date information possible — is a good indicator for the stock. The company’s earnings surprise history is solid. It delivered a positive earnings surprise of 43.48%, on average, over the past four quarters. Additionally, Netflix is expected to post robust earnings growth of 44.2% and revenue growth of 21.7% for the to-be-reported quarter. Further, the stock belongs to a top-ranked Zacks industry (placed at the top 44% of 250+ industries) with an impressive Growth Score of B.

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