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Netflix (NFLX) Stock Drops Despite Market Gains: Important Facts to Note

In the latest market close, Netflix (NFLX) reached $473.97, with a -0.67% movement compared to the previous day. This change lagged the S&P 500's 0.38% gain on the day. Elsewhere, the Dow saw an upswing of 1.47%, while the tech-heavy Nasdaq depreciated by 0.23%.

The the stock of internet video service has risen by 13.56% in the past month, leading the Consumer Discretionary sector's gain of 11.81% and the S&P 500's gain of 10.72%.

The upcoming earnings release of Netflix will be of great interest to investors. In that report, analysts expect Netflix to post earnings of $2.18 per share. This would mark year-over-year growth of 1716.67%. Meanwhile, the Zacks Consensus Estimate for revenue is projecting net sales of $8.7 billion, up 10.86% from the year-ago period.

For the full year, the Zacks Consensus Estimates project earnings of $12.07 per share and a revenue of $33.6 billion, demonstrating changes of +21.31% and +6.26%, respectively, from the preceding year.

Investors might also notice recent changes to analyst estimates for Netflix. These recent revisions tend to reflect the evolving nature of short-term business trends. As such, positive estimate revisions reflect analyst optimism about the company's business and profitability.

Empirical research indicates that these revisions in estimates have a direct correlation with impending stock price performance. To utilize this, we have created the Zacks Rank, a proprietary model that integrates these estimate changes and provides a functional rating system.

The Zacks Rank system, stretching from #1 (Strong Buy) to #5 (Strong Sell), has a noteworthy track record of outperforming, validated by third-party audits, with stocks rated #1 producing an average annual return of +25% since the year 1988. The Zacks Consensus EPS estimate has moved 0.15% higher within the past month. Netflix presently features a Zacks Rank of #3 (Hold).

In the context of valuation, Netflix is at present trading with a Forward P/E ratio of 39.53. This denotes a premium relative to the industry's average Forward P/E of 13.23.

We can additionally observe that NFLX currently boasts a PEG ratio of 1.86. The PEG ratio bears resemblance to the frequently used P/E ratio, but this parameter also includes the company's expected earnings growth trajectory. As the market closed yesterday, the Broadcast Radio and Television industry was having an average PEG ratio of 1.4.

The Broadcast Radio and Television industry is part of the Consumer Discretionary sector. This industry, currently bearing a Zacks Industry Rank of 73, finds itself in the top 29% echelons of all 250+ industries.

The strength of our individual industry groups is measured by the Zacks Industry Rank, which is calculated based on the average Zacks Rank of the individual stocks within these 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.

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

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