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

·3 min read

In the latest trading session, Netflix (NFLX) closed at $227.44, marking a -0.66% move from the previous day. This change lagged the S&P 500's daily gain of 0.66%. Elsewhere, the Dow gained 0.61%, while the tech-heavy Nasdaq added 0.08%.

Prior to today's trading, shares of the internet video service had lost 6.21% over the past month. This has lagged the Consumer Discretionary sector's loss of 4.73% and the S&P 500's loss of 3.79% in that time.

Netflix will be looking to display strength as it nears its next earnings release. In that report, analysts expect Netflix to post earnings of $2.11 per share. This would mark a year-over-year decline of 33.86%. Meanwhile, our latest consensus estimate is calling for revenue of $7.85 billion, up 4.86% from the prior-year quarter.

Looking at the full year, our Zacks Consensus Estimates suggest analysts are expecting earnings of $10.03 per share and revenue of $31.66 billion. These totals would mark changes of -10.77% and +6.6%, respectively, from last year.

It is also important to note the recent changes to analyst estimates for Netflix. These recent revisions tend to reflect the evolving nature of short-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. We developed the Zacks Rank to capitalize on this phenomenon. Our system takes these estimate changes into account and delivers a clear, actionable rating model.

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. Over the past month, the Zacks Consensus EPS estimate remained stagnant. Netflix is currently sporting a Zacks Rank of #3 (Hold).

Looking at its valuation, Netflix is holding a Forward P/E ratio of 22.83. This valuation marks a premium compared to its industry's average Forward P/E of 9.08.

We can also see that NFLX currently has a PEG ratio of 1.59. 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 industry currently had an average PEG ratio of 0.72 as of yesterday's close.

The Broadcast Radio and Television industry is part of the Consumer Discretionary sector. This industry currently has a Zacks Industry Rank of 199, which puts it in the bottom 22% 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.

You can find more information on all of these metrics, and much more, on Zacks.com.


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