Source: Wikimedia Commons

After Netflix (NASDAQ:NFLX) released earnings and revenue results for the first quarter of its 2014 fiscal year on April 21, shares soared nearly 7% in post-market trading. In response to this jump, some investors might think the stock is overbought; but with shares trading at a 19% discount from their 52-week high, is it possible the party's just now getting started?

Netflix smashed on earnings but matched on revenue
For the quarter, Netflix reported revenue of $1.27 billion. Although this was only in- line with analyst estimates, it represents an impressive 24.5% gain compared to the $1.02 billion the business reported in the year-ago quarter. According to the company's earnings release, the main driver behind its higher sales was an increase in its subscriber base.

At the end of the quarter, Netflix boasted 48.4 million subscribers. Although this is still smaller than Time Warner's (NYSE:TWX.DL) HBO's 127 million subscriber base, it's 33% larger than the 36.3 million subscribers management reported for the year-ago quarter. For the most part, this jump in customers was due to 6.5 million extra subscribers for the company's domestic streaming operations. On top of this great news, Netflix saw the number of subscribers paying for its services rise from 94.3% of total subscribers to 95.4%.

Source: Wikimedia Commons

In terms of profits, Netflix did even better. For the quarter, management reported earnings per share of $0.86. This is $0.03 higher than Mr. Market anticipated but is worlds apart from the $0.05 the company reported in the same quarter last year. In addition to benefiting from higher revenue, the company saw its cost of revenue fall from 72% of sales to 68.4%. Another driver behind the higher profit was the absence of a loss on the early extinguishment of debt this quarter compared to the year-ago quarter, which negatively affected earnings per share by $0.21 last year.

But can Netflix catch up to Time Warner's HBO?
Right now, the largest hurdle for Netflix to overcome is Time Warner's HBO operations. With a customer base only 38% the size of HBO, Netflix could still be considered a rather small player in the home-entertainment arena. Despite this setback, however, the company seems to be playing catch up nicely.

Over the past three fiscal-year periods, Netflix reported a 69% jump in subscribers from 26 million to 44 million. Although the company's major source of customers is the United States, its international subscriber count has skyrocketed over the years. In the past year alone, Netflix's international streaming users jumped 78% to 12.7 million from 7.1 million. Of these, approximately 93% are paying subscribers, up from the 89% the company saw in the same quarter last year.

(million subscribers) 2013 2012 2011 Increase
Time Warner's HBO 127 114 93 36.6%
Netflix 44 33 26 69.2%

Sources: Time Warner and Netflix

In contrast, HBO saw its subscriber count rise only 37% over this time frame, from 93 million to 127 million. Just as in the case of Netflix, a rising portion of HBO's customers are from international operations, which have grown its subscriber base by 57% from 53.4 million to 84 million. However, unlike Netflix, most of the company's customers are from abroad and its domestic growth has slowed significantly, which suggests near market saturation in the U.S.

Foolish takeaway
Based on the data provided, it looks as though Netflix is still growing rapidly and increasing its profitability faster than investors thought possible. Admittedly, the company is expensive, with shares trading at 188 times 2013's earnings, but its growing footprint in both the U.S. and abroad makes the business an attractive prospect.

However, for the Foolish investor who believes Netflix is overpriced, Time Warner, which is trading for 17 times earnings, may not be a bad idea. Yes, the company is growing much slower than Netflix, but its larger market presence holds some appeal.