U.S. markets closed

Netflix (NFLX) Gains As Market Dips: What You Should Know

Zacks Equity Research

In the latest trading session, Netflix (NFLX) closed at $453.72, marking a +0.86% move from the previous day. The stock outpaced the S&P 500's daily loss of 0.57%. Elsewhere, the Dow lost 0.8%, while the tech-heavy Nasdaq added 0.03%.

Investors will be hoping for strength from NFLX as it approaches its next earnings release, which is expected to be July 16, 2020. The company is expected to report EPS of $1.83, up 205% from the prior-year quarter. Meanwhile, our latest consensus estimate is calling for revenue of $6.07 billion, up 23.37% from the prior-year quarter.

NFLX's full-year Zacks Consensus Estimates are calling for earnings of $6.43 per share and revenue of $24.73 billion. These results would represent year-over-year changes of +55.69% and +22.69%, respectively.

Investors might also notice recent changes to analyst estimates for NFLX. Recent revisions tend to reflect the latest near-term business trends. As a result, we can interpret positive estimate revisions as a good sign for the company's business outlook.

Based on our research, we believe these estimate revisions are directly related to near-team stock moves. 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 0.04% higher. NFLX currently has a Zacks Rank of #2 (Buy).

In terms of valuation, NFLX is currently trading at a Forward P/E ratio of 70.02. For comparison, its industry has an average Forward P/E of 7, which means NFLX is trading at a premium to the group.

We can also see that NFLX currently has a PEG ratio of 2.33. 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. Broadcast Radio and Television stocks are, on average, holding a PEG ratio of 0.63 based on yesterday's closing prices.

The Broadcast Radio and Television industry is part of the Consumer Discretionary sector. This industry currently has a Zacks Industry Rank of 137, which puts it in the bottom 47% of all 250+ industries.

The Zacks Industry Rank gauges the strength of our 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.


Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report
 
Netflix, Inc. (NFLX) : Free Stock Analysis Report
 
To read this article on Zacks.com click here.