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

Roku, Inc. (NASDAQ:ROKU) shares reached a new 52-week high during trading on Tuesday following a stronger than expected earnings report. 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 firm had revenue of $1.50 billion for the quarter, compared to analysts’ expectations of $1.41 billion. During the same quarter in the prior year, the firm posted $0.16 earnings per share. Roku’s revenue for the quarter was up 24.1% compared to the same quarter last year.

Key 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

Analyst Upgrades and Downgrades

Several equities analysts recently issued reports on ROKU shares. Zacks Research upgraded Roku from a “hold” rating to a “strong-buy” rating in a research note on Tuesday, August 11th. Weiss Ratings upgraded shares of Roku from a “hold (c)” rating to a “hold (c+)” rating in a research note on Thursday, October 8th. BMO Capital Markets raised shares of Roku from a “market perform” rating to an “outperform” rating in a report on Tuesday. Needham & Company LLC restated a “buy” rating on shares of Roku in a research report on Tuesday. Finally, Wedbush reaffirmed a “neutral” rating and issued a $155.00 price target on shares of Roku in a report on Thursday, September 24th. One research analyst has rated the stock with a Strong Buy rating, seven have given a Buy rating and nineteen have assigned a Hold rating to the stock. Based on data from MarketBeat, the stock currently has a consensus rating of “Hold” and a consensus price target of $156.17.

Insiders Place Their Bets

In other news, insider Mustafa Ozgen sold 3,410 shares of the stock in a transaction on Wednesday, September 2nd. The stock was sold at an average price of $155.64, for a total value of $530,732.40. Following the completion of the transaction, the insider owned 25,569 shares of the company’s stock, valued at approximately $3,979,559.16. This represents a 11.77% decrease in their ownership of the stock. The transaction was disclosed in a document filed with the SEC, which can be accessed through this link. The transaction was executed under a pre-arranged Rule 10b5-1 trading plan. The sale was made to cover tax withholding obligations related to the vesting of equity awards. Also, insider Charles Collier sold 20,538 shares of the stock in a transaction on Friday, September 4th. The stock was sold at an average price of $156.99, for a total value of $3,224,260.62. Following the completion of the transaction, the insider directly owned 22,700 shares of the company’s stock, valued at approximately $3,563,673. The trade was a 47.50% decrease in their position. Additional details regarding this sale are available in the official SEC disclosure. The transaction was executed under a pre-arranged Rule 10b5-1 trading plan. Over the last three months, insiders sold 96,195 shares of company stock worth $14,854,525. 13.45% of the stock is owned by company insiders.

Institutional Investors Weigh In On Roku

Several institutional investors have recently bought and sold shares of the stock. Ashton Thomas Private Wealth LLC increased its stake in Roku by 18.5% during the 3rd quarter. Ashton Thomas Private Wealth LLC now owns 2,579 shares of the company’s stock valued at $393,000 after buying an additional 402 shares during the period. Heritage Family Offices LLP bought a new stake in shares of Roku during the 3rd quarter worth about $93,000. Calamos Advisors LLC lifted its stake in shares of Roku by 15.9% in the 3rd quarter. Calamos Advisors LLC now owns 376,627 shares of the company’s stock worth $57,353,000 after acquiring an additional 51,627 shares during the period. Kestra Advisory Services LLC lifted its stake in shares of Roku by 54.1% in the 3rd quarter. Kestra Advisory Services LLC now owns 10,753 shares of the company’s stock worth $1,637,000 after acquiring an additional 3,775 shares during the period. Finally, 3Chopt Investment Partners LLC lifted its stake in shares of Roku by 11.8% in the 3rd quarter. 3Chopt Investment Partners LLC now owns 3,924 shares of the company’s stock worth $598,000 after acquiring an additional 415 shares during the period. Institutional investors and hedge funds own 86.30% of the company’s stock.

Roku Price Performance

The firm’s fifty day moving average price is $155.11 and its 200-day moving average price is $127.79. The firm has a market capitalization of $23.75 billion, a P/E ratio of 68.46 and a beta of 2.05.

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.