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Netflix (NFLX) Gains As Market Dips: What You Should Know

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Netflix (NFLX - Free Report) closed the most recent trading day at $485, moving +0.44% from the previous trading session. The stock outpaced the S&P 500's daily loss of 0.16%. Elsewhere, the Dow lost 0.58%, while the tech-heavy Nasdaq added 0.48%.

Heading into today, shares of the internet video service had lost 1.24% over the past month, lagging the Consumer Discretionary sector's gain of 10.72% 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. On that day, NFLX is projected to report earnings of $1.37 per share, which would represent year-over-year growth of 5.38%. Our most recent consensus estimate is calling for quarterly revenue of $6.60 billion, up 20.64% from the year-ago period.

NFLX's full-year Zacks Consensus Estimates are calling for earnings of $6.26 per share and revenue of $24.95 billion. These results would represent year-over-year changes of +51.57% and +23.76%, respectively.

It is also important to note the recent changes to analyst estimates for NFLX. These recent revisions tend to reflect the evolving nature of short-term business trends. As such, positive estimate revisions reflect analyst optimism about the company's business and profitability.

Our research shows that these estimate changes are directly correlated with near-term stock prices. 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. Over the past month, the Zacks Consensus EPS estimate remained stagnant. NFLX is currently a Zacks Rank #3 (Hold).

Investors should also note NFLX's current valuation metrics, including its Forward P/E ratio of 77.13. Its industry sports an average Forward P/E of 9.43, so we one might conclude that NFLX is trading at a premium comparatively.

It is also worth noting that NFLX currently has a PEG ratio of 2.57. 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. Broadcast Radio and Television stocks are, on average, holding a PEG ratio of 1.29 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 92, putting it in the top 37% of all 250+ industries.

The Zacks Industry Rank includes is listed in order from best to worst in terms of the average Zacks Rank of the individual companies within each of these sectors. 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.


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