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Netflix NFLX has grown from upstart to giant that changed the way millions of people consume TV and movies in a short period of time. Yet, the streaming firm's massive success could end up hurting Netflix in the long run as the real industry titans, such as Disney DIS , look to encroach on its territory.

NFLX Overview

Netflix's on-demand streaming model has spawned into an entire industry. Today the company, which dethroned HBO's 17-year run on the top of the Emmy nomination list, boasts 137.1 million subscribers worldwide-a 25% jump from the year-ago period.

Netflix has focused on international and indie-style expansion, as well as bigger budget projects featuring A-list Hollywood stars. And only five years after it truly started to produce its own original content, Netflix is poised to spend $13.4 billion on TV shows and movies in 2018, according to Goldman Sachs GS .

The popularity and "must-watch" factor of its content will play a key role going forward as it faces competition from the likes of Amazon AMZN and soon enough Apple AAPL , AT&T T , and Disney.

DIS Overview

Clearly, Disney operates a much more diversified business. Disney's Q4 revenue climbed 12% to reach $14.307 billion, driven by a huge quarter from its Studio Entertainment division. Disney is also poised to close a $71.3 billion deal to acquire vital 21st Century Fox FOXA assets.

In a way, Netflix's success spurred Disney to go after Fox's TV and movie studios to help it create a more enticing stand-alone streaming service. The media conglomerate officially announced on its most recent quarterly earnings call the name of the streaming service it plans to roll out by late 2019.

Disney+ is set to carry a "rich array" of original Disney, Pixar, Marvel, Star Wars, and National Geographic content along with "unprecedented access" to Disney's library of film and television offerings. The initial list of new original shows includes two live-action Star Wars series, at least one Marvel offering, a Pixar series, and more.

Price & Valuation

Moving on, Netflix stock has clearly destroyed DIS over the last decade, but that's not saying much since they are at two very different stages and NFLX has crushed almost everyone. Plus, if we look at just the past six months, Disney stock has jumped roughly 12%, which outpaces the S&P 500's 3% dip. Meanwhile, shares of NFLX have plummeted 22%.

Netflix closed regular trading Thursday at roughly $282 a share, which marked a 33% discount compared to its 52-week high of $423 per share. Disney, on the other hand, sat just 5% below its 12-month high at $114 per share.

In terms of valuation, there is hardly a competition at this point, with DIS trading 15.8X forward 12-month Zacks Consensus EPS estimates, which rests below its five-year median of 17.3X and its industry's 18.2X average. NFLX currently trades at 68.5X forward earnings.

Netflix Outlook

Looking ahead, Netflix's Q4 earnings are projected to sink over 41%, based on our current Zacks Consensus Estimate. Luckily, the firm's adjusted full-year earnings are projected to skyrocket 110%. And the company's fiscal 2019 EPS figure is expected to come in 57% higher than our current-year estimate.

At the other end, NFLX's Q4 revenues are projected to climb 28% to reach $4.21 billion. Meanwhile, the company's fiscal 2018 revenues are projected to reach $15.84 billion, which would mark a 35.5% surge. Netflix's top line is then expected to jump 26% above our current year estimate in 2019.

Netflix's growth prospects appear solid, though its revenue expansion does look poised to slow down significantly. The company also expects to add a total of 9.4 million subscribers in Q4, which would bring its total to 146.5 million. However, we should note that as it races to expand its worldwide reach and content, the company has started to take on a potentially alarming amount of debt.

The streaming company said in October that it is set to issue $2 billion in new debt, which will see it reach roughly $10 billion in long-term debt. This could soon hurt Netflix's earnings as it continues to burn cash.

Bottom Line

Disney's current fiscal year revenues are projected to pop by 1.6%. The historic entertainment power's short-term earnings outlook is also hardly inspiring. With that said, the company pays a dividend and is about to embark on a new streaming chapter.

Let's also not forget that Disney has multiple revenue streams and looks ready to control a significant portion of what will soon be the last great hope for advertisers: live sports-via ESPN.

In the end, growth investors will likely favor Netflix, especially since it has been beaten down lately. However, Netflix's continued control over the streaming market seems more uncertain than ever with so many companies, with much larger pocketbooks, set to enter the market within the next year.

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The Walt Disney Company (DIS): Free Stock Analysis Report

Netflix, Inc. (NFLX): Free Stock Analysis Report

Amazon.com, Inc. (AMZN): Free Stock Analysis Report

AT&T Inc. (T): Free Stock Analysis Report

Apple Inc. (AAPL): Free Stock Analysis Report

The Goldman Sachs Group, Inc. (GS): Free Stock Analysis Report

Twenty-First Century Fox, Inc. (FOXA): Free Stock Analysis Report

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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of NASDAQ, Inc.

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