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

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Netflix (NFLX - Free Report) closed at $235.44 in the latest trading session, marking a -1.78% move from the prior day. This change lagged the S&P 500's daily loss of 1.51%. Meanwhile, the Dow lost 1.71%, and the Nasdaq, a tech-heavy index, lost 0.02%.

Prior to today's trading, shares of the internet video service had gained 4.2% over the past month. This has outpaced the Consumer Discretionary sector's loss of 11.94% and the S&P 500's loss of 9.52% in that time.

Investors will be hoping for strength from Netflix as it approaches its next earnings release, which is expected to be October 18, 2022. In that report, analysts expect Netflix to post earnings of $2.12 per share. This would mark a year-over-year decline of 33.54%. Meanwhile, the Zacks Consensus Estimate for revenue is projecting net sales of $7.86 billion, up 5.02% from the year-ago period.

NFLX's full-year Zacks Consensus Estimates are calling for earnings of $10.03 per share and revenue of $31.68 billion. These results would represent year-over-year changes of -10.77% and +6.69%, respectively.

It is also important to note the recent changes to analyst estimates for Netflix. These revisions typically reflect the latest short-term business trends, which can change frequently. 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. Investors can capitalize on this by using the Zacks Rank. This model considers these estimate changes and provides a simple, actionable rating system.

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 has moved 0.07% higher. Netflix is currently a Zacks Rank #3 (Hold).

In terms of valuation, Netflix is currently trading at a Forward P/E ratio of 23.89. For comparison, its industry has an average Forward P/E of 8.22, which means Netflix is trading at a premium to the group.

Investors should also note that NFLX has a PEG ratio of 1.67 right now. 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 0.89 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 220, putting it in the bottom 13% 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.

Make sure to utilize Zacks.com to follow all of these stock-moving metrics, and more, in the coming trading sessions.


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