Buy the Dip in GE Aerospace or Netflix Stock After Q3 Earnings?

As two of the market’s top-performing stocks in recent years, the discussion of buying the post-earnings dip in GE Aerospace GE or Netflix NFLX shares is a worthy topic after their Q3 reports on Tuesday.Having impressive stock gains of around +300% in the last three years, respectively, GE shares were down 3% in today’s trading session with NFLX down 10%. More intriguing is that both of these respective industry leaders raised their guidance, adding steam to a buy-the-dip scenario. Image Source: Zacks Investment Research LEAP Engine Sales Drive GE Aerospace’s Strong Q3 ResultsReflecting a broader recovery in global air travel and fleet modernization, GE Aerospace’s Q3 sales surged 26% to $11.3 billion from $8.94 billion in the comparative quarter. Propelling GE in particular was its LEAP engines, which are known for their reliability and efficiency and are growing in popularity due to their use in various modern aircraft such as Airbus’s EADSY A320neo and Boeing’s BA 737 MAX. GE Aerospace’s earnings soared 44% to $1.66 per share, versus EPS of $1.15 in Q3 2024. Furthermore, this impressively topped the Zacks EPS Consensus of $1.46 by 14%. Brazilian Tax Dispute Dampens Netflix’s Q3 ResultsExcluding a one-time charge related to a tax dispute in Brazil, Netflix’s core business performance was strong during Q3, highlighted by increased ad sales and new content partnerships. However, Netflix’s operations in Brazil were challenged by local authorities in regard to how the streaming king classifies and reports certain revenues and expenses. This resulted in a $400 million non-recurring tax expense that dented Netflix’s net income, as Q3 EPS of $5.87 was up 9% YoY but noticeably missed expectations of $6.89 by 15%. Netflix’s Q3 sales of $11.51 billion spiked 17% from $9.82 billion a year ago but slightly missed estimates of $11.52 billion. GE Aerospace & Netflix’s Raised GuidanceRaising its full-year 2025 guidance, GE Aerospace now expects adjusted EPS between $6.00-$6.20, up from a previous forecast of $5.90. GE Aerospace now projects full-year revenue growth in the mid-teens, up from its previous estimate of low double-digit growth.Pivoting to Netflix, the company now expects full-year revenue growth at approximately 16% from a previous forecast of 14%. Notably, Netflix also raised its operating margin forecast from 21% to 22%. Monitoring GE Aerospace & Netflix’s ValuationCorrelating with their high growth prospects, GE Aerospace and Netflix stock are trading at notable premiums to the broader market at 52X and 47X forward earnings, respectively. Keeping their blazing stock performances over the last three years in mind, GE and NFLX trade below their forward P/E highs during this period but are above their medians as shown below. Image Source: Zacks Investment ResearchOther traditional metrics, like price to sales, also point to GE and NFLX trading at stretched valuations, although the bright spot to their value has been through cash flow. Netflix especially stands out with a very high cash flow per share ratio of 59X, with GE Aerospace’s 8X being pleasantly above the S&P 500’s average of 6X as well.Image Source: Zacks Investment Research Conclusion & Final Thoughts It’s hard to overlook the idea of buying the post-earnings dip in GE Aerospace and Netflix stock but for now, both land a Zacks Rank #3 (Hold). In terms of their valuations, more appealing opportunities could certainly come on a further drop, and the real indicator of more upside will be the trend of earnings estimate revisions (EPS) following their Q3 reports.That said, given that these high-growth companies raised their guidance, the revision trend should be positive, especially for GE, considering its impressive earnings beat.Beyond Nvidia: AI's Second Wave Is HereThe AI revolution has already minted millionaires. But the stocks everyone knows about aren't likely to keep delivering the biggest profits. Little-known AI firms tackling the world's biggest problems may be more lucrative in the coming months and years.See "2nd Wave" AI stocks now >>Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report GE Aerospace (GE): Free Stock Analysis Report Netflix, Inc. (NFLX): Free Stock Analysis Report The Boeing Company (BA): Free Stock Analysis Report Airbus SE - Unsponsored ADR (EADSY): Free Stock Analysis ReportThis article originally published on Zacks Investment Research (zacks.com).Zacks Investment ResearchWeiter zum vollständigen Artikel bei Zacks Weiter zum vollständigen Artikel bei Zacks