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

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Netflix (NFLX - Free Report) closed at $267.62 in the latest trading session, marking a +1.73% move from the prior day. This change outpaced the S&P 500's 0.51% gain on the day. Meanwhile, the Dow gained 0.36%, and the Nasdaq, a tech-heavy index, added 0.75%.

Coming into today, shares of the internet video service had lost 11.36% in the past month. In that same time, the Consumer Discretionary sector gained 1.1%, while the S&P 500 gained 3.44%.

Investors will be hoping for strength from NFLX as it approaches its next earnings release. In that report, analysts expect NFLX to post earnings of $0.56 per share. This would mark a year-over-year decline of 37.08%. Meanwhile, the Zacks Consensus Estimate for revenue is projecting net sales of $5.25 billion, up 31.34% from the year-ago period.

For the full year, our Zacks Consensus Estimates are projecting earnings of $3.25 per share and revenue of $20.22 billion, which would represent changes of +21.27% and +28.01%, respectively, from the prior year.

Investors should also note any recent changes to analyst estimates for NFLX. Recent revisions tend to reflect the latest near-term business trends. With this in mind, we can consider positive estimate revisions a sign of optimism about the company's business outlook.

Research indicates that these estimate revisions are directly correlated with near-term share price momentum. To benefit from this, we have developed the Zacks Rank, a proprietary model which takes these estimate changes into account and provides an 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. Over the past month, the Zacks Consensus EPS estimate has moved 0.38% lower. NFLX is holding a Zacks Rank of #4 (Sell) right now.

Digging into valuation, NFLX currently has a Forward P/E ratio of 80.93. For comparison, its industry has an average Forward P/E of 14.77, which means NFLX is trading at a premium to the group.

It is also worth noting that NFLX currently has a PEG ratio of 2.7. 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 1.44 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 222, putting it in the bottom 14% 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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