Streaming-TV company Netflix (NASDAQ:NFLX) has had a great 2019. But its stock still managed to underperform the S&P 500's rise during this time frame. Year to date, Netflix is up 23% -- well below the S&P 500's 29% gain. Given the stock's recent underperformance, investors are likely hoping Netflix's fourth-quarter earnings report can add some zest to the company's growth story.

The streaming-TV giant is scheduled to report its fourth-quarter results on Jan. 21. Here's an overview of some key areas investors will want to keep in mind going into the report.

A group of young people watching TV

Image source: Getty Images.

Operating margin

One reason Netflix is able to command such a premium valuation is its fast-growing earnings. The company's earnings per share soared 65% year over year in Q3. While a 30% increase in revenue over this same time frame helped, another key factor is Netflix's improving operating margin (operating profit as a percentage of revenue). The company's operating margin has been steadily expanding -- and management expects the same thing to happen in Q4.

Netflix guided for a fourth-quarter operating margin of 8.7% -- up from 5.2% in the fourth quarter of 2018. In addition, for the full year of 2019, management expects its operating margin to come in at 13% -- up 300 basis points year over year.

While investors should check on the company's reported fourth-quarter and full-year operating margin when Netflix reports results next month, it will be also worth looking to see if management updates its view for its 2020 operating margin. In Netflix's third-quarter shareholder letter, management said it expected its operating margin to expand by another 300 basis points in 2020.

Subscriber growth

Netflix's paid members continued to grow sharply in 2019. The company's total paid members were up 21% year over year in Q3, with 6.7 million net new members in Q3 alone. In Q4, Netflix expects to add 7.6 million new paid members -- an impressive figure in light of rising competition in streaming TV. Both Apple and Walt Disney launched new streaming services during the quarter.

In Netflix's third-quarter shareholder letter, management seemed unphased by new competition. Despite various companies and competing activities vying for consumers' time, "there is also a very large market opportunity; today we believe we're less than 10% of TV screen time in the U.S. (our most mature market) and much less than that in mobile screen time," management explained.

During the quarter, Netflix expects 600,000 of its new members to come from the U.S. and 7 million to come from its international segment. Reflecting management's confidence in its member trends, this guidance implies greater net member additions in both the U.S. and international markets.

Netflix reports fourth-quarter results after market close on Tuesday, Jan. 1.

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