Roku (NASDAQ:ROKU) Sets New 1-Year High on Earnings Beat

Roku, Inc. (NASDAQ:ROKU) shares reached a new 52-week high on Tuesday after the company announced better than expected quarterly earnings. The stock traded as high as $160.38 and last traded at $159.9270, with a volume of 612,394 shares traded. The stock had previously closed at $155.52.

The company reported $1.20 earnings per share (EPS) for the quarter, beating the consensus estimate of $0.55 by $0.65. Roku had a return on equity of 13.73% and a net margin of 6.82%. The company had revenue of $1.50 billion for the quarter, compared to analysts’ expectations of $1.41 billion. During the same period last year, the firm earned $0.16 EPS. The firm’s revenue for the quarter was up 24.1% on a year-over-year basis.

More Roku News

Here are the key news stories impacting Roku this week:

• Positive Sentiment: Strong Q3 results: Roku reported $1.20 in adjusted earnings per share versus the $0.55 consensus estimate, while revenue rose 24.1% year over year to $1.50 billion, exceeding expectations of $1.41 billion. Net income reached $183 million, supported by stronger advertising profitability and lower marketing expenses. MarketBeat Roku earnings report
• Positive Sentiment: Advertising momentum: Advertising revenue grew 23%, and improved ad margins helped drive a roughly sevenfold increase in profit from the prior-year quarter. The results reinforce the case that Roku’s platform business is gaining operating leverage. The Motley Fool advertising and profit report
• Positive Sentiment: Fox transaction advances: Fox said it had received all required foreign regulatory approvals for its planned approximately $22 billion acquisition of Roku, narrowing the deal spread and reducing a key closing risk. MSN Fox-Roku deal report
• Neutral Sentiment: Limited forward guidance: Because of the pending Fox acquisition, Roku did not hold an earnings call or provide financial outlook. That makes the strong quarter supportive for sentiment but leaves investors with less visibility into standalone future performance. Roku third-quarter financial results
• Negative Sentiment: Analyst downgrade: Rosenblatt Securities lowered Roku from “buy” to “neutral” and set a $160 price target, suggesting limited upside after the stock’s strong run and the earnings-driven rally. Ticker Report Roku downgrade

Wall Street Analysts Forecast Growth

ROKU has been the topic of several research reports. BMO Capital Markets upgraded shares of Roku from a “market perform” rating to an “outperform” rating in a research report on Tuesday. Guggenheim lowered shares of Roku from a “buy” rating to a “neutral” rating and raised their price objective for the company from $145.00 to $160.00 in a research report on Friday, August 7th. Fox Advisors set a $157.00 price objective on shares of Roku in a research report on Friday, July 17th. Zacks Research raised shares of Roku from a “hold” rating to a “strong-buy” rating in a research note on Tuesday, August 11th. Finally, Seaport Research Partners downgraded shares of Roku from a “buy” rating to a “neutral” rating in a report on Friday, August 7th. One equities research analyst has rated the stock with a Strong Buy rating, seven have given a Buy rating and nineteen have issued a Hold rating to the company’s stock. Based on data from MarketBeat, the stock has a consensus rating of “Hold” and a consensus price target of $156.17.

Insider Buying and Selling

In other news, Director Neil Hunt sold 2,000 shares of the firm’s stock in a transaction on Thursday, October 1st. The stock was sold at an average price of $151.09, for a total value of $302,180.00. Following the completion of the sale, the director owned 9,629 shares of the company’s stock, valued at $1,454,845.61. This trade represents a 17.20% decrease in their ownership of the stock. The sale was disclosed in a filing with the SEC, which is available at this link. The transaction was executed under a pre-arranged Rule 10b5-1 trading plan. Also, CAO Matthew Banks sold 554 shares of Roku stock in a transaction on Thursday, October 1st. The shares were sold at an average price of $152.21, for a total value of $84,324.34. Following the transaction, the chief accounting officer owned 7,568 shares in the company, valued at $1,151,925.28. This represents a 6.82% decrease in their position. The SEC filing for this sale provides additional information. The transaction was executed under a pre-arranged Rule 10b5-1 trading plan. Over the last three months, insiders have sold 96,195 shares of company stock valued at $14,854,525. 13.45% of the stock is currently owned by company insiders.

Hedge Funds Weigh In On Roku

A number of large investors have recently made changes to their positions in ROKU. Arrowstreet Capital Limited Partnership lifted its position in shares of Roku by 229.5% in the first quarter. Arrowstreet Capital Limited Partnership now owns 2,038,347 shares of the company’s stock worth $192,868,000 after purchasing an additional 1,419,772 shares in the last quarter. HBK Investments L P acquired a new stake in shares of Roku during the second quarter worth approximately $163,604,000. Renaissance Technologies LLC boosted its holdings in shares of Roku by 22.8% during the first quarter. Renaissance Technologies LLC now owns 1,565,100 shares of the company’s stock worth $148,090,000 after purchasing an additional 290,200 shares during the period. Bank of New York Mellon Corp purchased a new position in Roku during the second quarter valued at approximately $105,216,000. Finally, Bank of America Corp DE grew its position in Roku by 5.5% during the first quarter. Bank of America Corp DE now owns 1,082,755 shares of the company’s stock valued at $102,450,000 after purchasing an additional 56,893 shares in the last quarter. Institutional investors and hedge funds own 86.30% of the company’s stock.

Roku Stock Up 2.9%

The stock has a market capitalization of $23.75 billion, a PE ratio of 68.46 and a beta of 2.05. The stock’s 50-day moving average is $155.11 and its 200 day moving average is $127.79.

About Roku

Roku, Inc (NASDAQ: ROKU) operates a television streaming platform that connects consumers with digital entertainment. The company develops and licenses Roku OS, an operating system for smart televisions and streaming devices, and offers Roku-branded streaming players, Roku TVs, audio products and related accessories.

Roku also operates a platform business that distributes streaming content through its interface and supports content discovery, subscriptions and digital advertising. Its services include The Roku Channel, which provides a selection of ad-supported and premium entertainment, as well as tools that enable content providers and advertisers to reach streaming audiences.

Founded in 2002 by Anthony Wood, Roku initially became known for its streaming players and later expanded through partnerships with television manufacturers.