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

Zacks Equity Research
·3 min read

In the latest trading session, Netflix (NFLX) closed at $494.25, marking a -0.97% move from the previous day. This change lagged the S&P 500's 0.04% gain on the day. At the same time, the Dow added 0.19%, and the tech-heavy Nasdaq gained 0.28%.

Heading into today, shares of the internet video service had lost 4.46% over the past month, lagging the Consumer Discretionary sector's gain of 3.46% and the S&P 500's gain of 3.84% in that time.

Investors will be hoping for strength from NFLX as it approaches its next earnings release, which is expected to be January 19, 2021. The company is expected to report EPS of $1.38, up 6.15% from the prior-year quarter. Meanwhile, our latest consensus estimate is calling for revenue of $6.60 billion, up 20.79% from the prior-year quarter.

It is also important to note the recent changes to analyst estimates for NFLX. These revisions help to show the ever-changing nature of near-term business trends. As a result, we can interpret positive estimate revisions as a good sign for the company's business outlook.

Research indicates that these estimate revisions are directly correlated with near-term share price momentum. 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 has moved 0.41% higher. NFLX is currently a Zacks Rank #3 (Hold).

Investors should also note NFLX's current valuation metrics, including its Forward P/E ratio of 54.92. This valuation marks a premium compared to its industry's average Forward P/E of 16.97.

Investors should also note that NFLX has a PEG ratio of 1.83 right now. This popular metric is similar to the widely-known P/E ratio, with the difference being that the PEG ratio also takes into account the company's expected earnings growth rate. The Broadcast Radio and Television was holding an average PEG ratio of 1.48 at yesterday's closing price.

The Broadcast Radio and Television industry is part of the Consumer Discretionary sector. This industry currently has a Zacks Industry Rank of 182, which puts it in the bottom 29% 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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Zacks Investment Research