Back to top

Image: Bigstock

Netflix (NFLX) Dips More Than Broader Markets: What You Should Know

Read MoreHide Full Article

In the latest trading session, Netflix (NFLX - Free Report) closed at $516.05, marking a -1.84% move from the previous day. This change lagged the S&P 500's 0.81% loss on the day. Elsewhere, the Dow lost 0.56%, while the tech-heavy Nasdaq lost 1.27%.

Prior to today's trading, shares of the internet video service had gained 3.27% over the past month. This has lagged the Consumer Discretionary sector's gain of 6.62% and the S&P 500's gain of 5.06% in that time.

NFLX will be looking to display strength as it nears its next earnings release. In that report, analysts expect NFLX to post earnings of $2.12 per share. This would mark year-over-year growth of 44.22%. Meanwhile, the Zacks Consensus Estimate for revenue is projecting net sales of $6.37 billion, up 21.49% from the year-ago period.

Looking at the full year, our Zacks Consensus Estimates suggest analysts are expecting earnings of $6.28 per share and revenue of $24.83 billion. These totals would mark changes of +52.06% and +23.21%, respectively, from last year.

Investors might also notice recent changes to analyst estimates for NFLX. These recent revisions tend to reflect the evolving nature of short-term business trends. As a result, we can interpret positive estimate revisions as a good sign for the company's business outlook.

Based on our research, we believe these estimate revisions are directly related to near-team stock moves. We developed the Zacks Rank to capitalize on this phenomenon. Our system takes these estimate changes into account and delivers a clear, actionable rating model.

Ranging from #1 (Strong Buy) to #5 (Strong Sell), the Zacks Rank system has a proven, outside-audited track record of outperformance, with #1 stocks returning an average of +25% annually since 1988. Within the past 30 days, our consensus EPS projection remained stagnant. NFLX is currently a Zacks Rank #3 (Hold).

Looking at its valuation, NFLX is holding a Forward P/E ratio of 83.66. For comparison, its industry has an average Forward P/E of 10.84, which means NFLX is trading at a premium to the group.

We can also see that NFLX currently has a PEG ratio of 2.79. This popular metric is similar to the widely-known P/E ratio, with the difference being that the PEG ratio also takes into account the company's expected earnings growth rate. Broadcast Radio and Television stocks are, on average, holding a PEG ratio of 0.66 based on yesterday's closing prices.

The Broadcast Radio and Television industry is part of the Consumer Discretionary sector. This group has a Zacks Industry Rank of 170, putting it in the bottom 34% of all 250+ industries.

The Zacks Industry Rank gauges the strength of our industry groups by measuring the average Zacks Rank of the individual stocks within the groups. Our research shows that the top 50% rated industries outperform the bottom half by a factor of 2 to 1.

To follow NFLX in the coming trading sessions, be sure to utilize Zacks.com.


In-Depth Zacks Research for the Tickers Above


Normally $25 each - click below to receive one report FREE:


Netflix, Inc. (NFLX) - free report >>

Published in