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

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Netflix (NFLX - Free Report) closed the most recent trading day at $349.60, moving -0.85% from the previous trading session. This move lagged the S&P 500's daily loss of 0.21%. At the same time, the Dow lost 0.09%, and the tech-heavy Nasdaq lost 0.18%.

Coming into today, shares of the internet video service had gained 2.29% in the past month. In that same time, the Consumer Discretionary sector gained 2.41%, while the S&P 500 gained 1.81%.

Investors will be hoping for strength from NFLX as it approaches its next earnings release. The company is expected to report EPS of $0.58, down 9.9% from the prior-year quarter. Meanwhile, the Zacks Consensus Estimate for revenue is projecting net sales of $4.49 billion, up 21.29% from the year-ago period.

Looking at the full year, our Zacks Consensus Estimates suggest analysts are expecting earnings of $4.05 per share and revenue of $20.17 billion. These totals would mark changes of +50.95% and +27.69%, respectively, from last year.

It is also important to note the recent changes to analyst estimates for NFLX. 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.

Research indicates that these estimate revisions are directly correlated with near-term share price momentum. 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.

The Zacks Rank system ranges from #1 (Strong Buy) to #5 (Strong Sell). It has a remarkable, outside-audited track record of success, with #1 stocks delivering an average annual return of +25% since 1988. Over the past month, the Zacks Consensus EPS estimate has moved 0.4% higher. NFLX currently has a Zacks Rank of #3 (Hold).

Investors should also note NFLX's current valuation metrics, including its Forward P/E ratio of 87.16. This valuation marks a premium compared to its industry's average Forward P/E of 16.21.

Also, we should mention that NFLX has a PEG ratio of 2.91. 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 1.2 at yesterday's closing price.

The Broadcast Radio and Television industry is part of the Consumer Discretionary sector. This group has a Zacks Industry Rank of 66, putting it in the top 26% 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.

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




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