Back to top

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 $351.27, marking a -0.21% move from the previous day. This move lagged the S&P 500's daily loss of 0.04%. At the same time, the Dow lost 0.05%, and the tech-heavy Nasdaq lost 0.01%.

Prior to today's trading, shares of the internet video service had gained 1.96% over the past month. This has outpaced the Consumer Discretionary sector's loss of 1.55% and the S&P 500's gain of 0.34% in that time.

Wall Street will be looking for positivity from NFLX as it approaches its next earnings report date. On that day, NFLX is projected to report earnings of $0.56 per share, which would represent a year-over-year decline of 34.12%. Meanwhile, our latest consensus estimate is calling for revenue of $4.93 billion, up 26.11% from the prior-year quarter.

For the full year, our Zacks Consensus Estimates are projecting earnings of $3.31 per share and revenue of $20.18 billion, which would represent changes of +23.51% and +27.78%, respectively, from the prior year.

It is also important to note the recent changes to analyst estimates for NFLX. These revisions help to show the ever-changing nature of near-term business trends. With this in mind, we can consider positive estimate revisions a sign of optimism about 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.

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 0.33% higher within the past month. NFLX currently has a Zacks Rank of #3 (Hold).

In terms of valuation, NFLX is currently trading at a Forward P/E ratio of 106.22. Its industry sports an average Forward P/E of 14.25, 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 3.54. This metric is used similarly to the famous P/E ratio, but the PEG ratio also takes into account the stock's expected earnings growth rate. The Broadcast Radio and Television industry currently had an average PEG ratio of 1.2 as of yesterday's close.

The Broadcast Radio and Television industry is part of the Consumer Discretionary sector. This group has a Zacks Industry Rank of 106, putting it in the top 42% 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.


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