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

Zacks Equity Research

Netflix (NFLX) closed the most recent trading day at $274.46, moving +0.61% from the previous trading session. This move outpaced the S&P 500's daily loss of 0.45%. Elsewhere, the Dow lost 0.36%, while the tech-heavy Nasdaq lost 0.33%.

Coming into today, shares of the internet video service had lost 6.98% in the past month. In that same time, the Consumer Discretionary sector lost 1.09%, while the S&P 500 gained 0.59%.

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 $1.05 per share. This would mark year-over-year growth of 17.98%. Meanwhile, the Zacks Consensus Estimate for revenue is projecting net sales of $5.25 billion, up 31.34% from the year-ago period.

Looking at the full year, our Zacks Consensus Estimates suggest analysts are expecting earnings of $3.25 per share and revenue of $20.22 billion. These totals would mark changes of +21.27% and +28.01%, respectively, from last year.

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

Our research shows that these estimate changes are directly correlated with near-term stock prices. 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. Within the past 30 days, our consensus EPS projection has moved 0.14% lower. NFLX is currently a Zacks Rank #3 (Hold).

Digging into valuation, NFLX currently has a Forward P/E ratio of 83.92. This represents a premium compared to its industry's average Forward P/E of 14.53.

We can also see that NFLX currently has a PEG ratio of 2.8. 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 was holding an average PEG ratio of 1.42 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 217, putting it in the bottom 15% 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.

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


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