Online and by-mail movie maven Netflix (NASDAQ:NFLX) reports fourth-quarter earnings on Monday night. The company shrugged off the budding recession in the third quarter, but can top-notch CEO Reed Hastings pull off another magic trick for the holidays? Why yes, I believe he can.

What Fools say
Here's how Netflix's CAPS rating stacks up against those of some of its peers and competitors:

 

Market Cap (billions)

Trailing P/E Ratio

CAPS Rating

Apple (NASDAQ:AAPL)

$79.2

16.6

***

Comcast (NASDAQ:CMCSA)

$43.3

16.8

**

Amazon.com (NASDAQ:AMZN)

$21.8

34.8

**

Netflix

$1.8

26.1

***

Blockbuster (NYSE:BBI)

$0.3

17.5

*

Data taken from Motley Fool CAPS and Yahoo! Finance on Jan. 23, 2009.

All-Star CAPS player iammikeDOTorg likes Netflix but not its stock: "Great company, great product, but overvalued in these times. I think we'll see it pull back a bit in the next few months compared to the rest of the market."

nrlbuild keeps a long view of the market in mind and thinks that this stock will outperform the market: "Stand a reasonably good chance of dominating movie delivery to the consumer via whatever method in demand at the time. People love movies, a relative inexpensive form of entertainment and fascination to so many. They have proven how to fight with their Blockbuster showdown. David Gardner recommended."

What management does
You won't see margins swinging very far to either side because Netflix uses operating costs like marketing expenses as a throttle to control growth and net profits. The real story here is in sales growth, which remains fairly healthy through the economic trough of 2008 -- albeit with plenty of room for improvement.

Margins

6/07

9/07

12/07

3/08

6/08

9/08

Gross

37.0%

36.0%

34.8%

33.6%

32.8%

32.9%

Operating

6.9%

7.0%

7.0%

7.2%

7.2%

7.9%

Net

5.5%

5.6%

5.6%

5.7%

5.7%

5.8%

FCF/Revenue

20.4%

20.9%

20.5%

21.8%

21.8%

20.6%

Growth (YOY)

6/07

9/07

12/07

3/08

6/08

9/08

Revenue

37.7%

29.3%

20.9%

13.8%

10.3%

10.8%

Earnings

(5.5%)

(9.2%)

36.4%

29.2%

13.8%

16.0%

All data courtesy of Capital IQ, a division of Standard & Poor's. Data reflects trailing-12-month performance for the quarters ended in the named months.

One Fool says
While the fourth quarter typically brings the largest subscriber growth of the year for Netflix, I'm going to stay conservative and predict a 9.2 million customer count this time. Two years ago, Hastings still believed in 20 million subscribers by the end of 2012, and my own modeling indicates that he'll get there at the current growth rate -- by the skin of his teeth.

For Netflix to truly live up to its long-held multi-year goals, the "net" part of the company needs to pick up the pace. But that was probably always the intention, or else the company would have been named "Mailflix" or "Postflix." But it's been Netflix from day 1. That's why I'm so excited to see the company going after consumer electronics partners with a vengeance these days, enabling online movie watching in your living room.

With more subscribers comes more revenue, and Netflix should pump every extra penny back into more R&D and marketing. That's how a high-tech subscription service keeps the growth train rolling. I have faith that Netflix probably outperformed my own modest expectations this holiday season; I know these guys know how to build a Rolodex.

More Fooldom on the silver screen:

Netflix, Amazon.com, and Apple are Motley Fool Stock Advisor recommendations. Try any of our Foolish newsletters today, free for 30 days. Or just sign up for a free CAPS account to find the identities of your fellow Fools who were quoted above. They might have more to tell you!

Fool contributor Anders Bylund is a longtime Netflix shareholder, but he holds no other position in any of the companies discussed here. You can check out Anders' holdings if you like, and Foolish disclosure is the Punxsutawney Phil of financial forecasting.