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

Zacks Equity Research

Netflix (NFLX) closed at $265.92 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 0.01%. At the same time, the Dow added 0.06%, and the tech-heavy Nasdaq lost 0.06%.

Coming into today, shares of the internet video service had lost 8.82% in the past month. In that same time, the Consumer Discretionary sector gained 2.07%, while the S&P 500 gained 3.23%.

Investors will be hoping for strength from NFLX as it approaches its next earnings release. On that day, NFLX is projected to report earnings of $1.05 per share, which would represent year-over-year growth of 17.98%. Our most recent consensus estimate is calling for quarterly revenue 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 might also notice recent changes to analyst estimates for NFLX. These revisions help to show the ever-changing nature of near-term business trends. 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. 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.

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. The Zacks Consensus EPS estimate has moved 0.38% lower within the past month. NFLX is currently sporting a Zacks Rank of #3 (Hold).

Digging into valuation, NFLX currently has a Forward P/E ratio of 83.29. For comparison, its industry has an average Forward P/E of 15.23, which means NFLX is trading at a premium to the group.

Also, we should mention that NFLX has a PEG ratio of 2.78. 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 1.47 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 216, putting it in the bottom 16% 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.

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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Netflix, Inc. (NFLX) : Free Stock Analysis Report
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