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Netflix (NFLX) Outpaces Stock Market Gains: What You Should Know

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Netflix (NFLX - Free Report) closed the most recent trading day at $482.03, moving +0.28% from the previous trading session. The stock outpaced the S&P 500's daily gain of 0.05%. At the same time, the Dow added 0.48%, and the tech-heavy Nasdaq lost 0.61%.

Coming into today, shares of the internet video service had lost 0.14% in the past month. In that same time, the Consumer Discretionary sector gained 1.58%, while the S&P 500 lost 0.52%.

Investors will be hoping for strength from NFLX as it approaches its next earnings release. The company is expected to report EPS of $2.11, up 43.54% from the prior-year quarter. Meanwhile, the Zacks Consensus Estimate for revenue is projecting net sales of $6.37 billion, up 21.54% 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 $24.84 billion. These totals would mark changes of +52.06% and +23.22%, respectively, from last year.

Investors might also notice recent changes to analyst estimates for NFLX. Recent revisions tend to reflect the latest near-term business trends. As such, positive estimate revisions reflect analyst optimism about the company's business and profitability.

Research indicates that these estimate revisions are directly correlated with near-term share price momentum. Investors can capitalize on this by using the Zacks Rank. This model considers these estimate changes and provides a simple, actionable rating system.

The Zacks Rank system, which ranges from #1 (Strong Buy) to #5 (Strong Sell), has an impressive outside-audited track record of outperformance, with #1 stocks generating an average annual return of +25% since 1988. The Zacks Consensus EPS estimate has moved 0.04% lower within the past month. NFLX is holding a Zacks Rank of #3 (Hold) right now.

Digging into valuation, NFLX currently has a Forward P/E ratio of 76.52. Its industry sports an average Forward P/E of 11.65, so we one might conclude that NFLX is trading at a premium comparatively.

Investors should also note that NFLX has a PEG ratio of 2.55 right now. The PEG ratio is similar to the widely-used P/E ratio, but this metric also takes the company's expected earnings growth rate into account. The Broadcast Radio and Television was holding an average PEG ratio of 0.66 at yesterday's closing price.

The Broadcast Radio and Television industry is part of the Consumer Discretionary sector. This industry currently has a Zacks Industry Rank of 124, which puts it in the top 49% of all 250+ industries.

The Zacks Industry Rank gauges the strength of our individual 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.

Be sure to follow all of these stock-moving metrics, and many more, on Zacks.com.


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