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

Zacks Equity Research

Netflix (NFLX) closed the most recent trading day at $333.10, moving -1.13% from the previous trading session. This change lagged the S&P 500's 0.09% gain on the day. Meanwhile, the Dow gained 0.34%, and the Nasdaq, a tech-heavy index, added 0.23%.

Coming into today, shares of the internet video service had gained 8.09% in the past month. In that same time, the Consumer Discretionary sector gained 5.91%, while the S&P 500 gained 3.81%.

Investors will be hoping for strength from NFLX as it approaches its next earnings release, which is expected to be January 21, 2020. In that report, analysts expect NFLX to post earnings of $0.52 per share. This would mark year-over-year growth of 73.33%. Meanwhile, the Zacks Consensus Estimate for revenue is projecting net sales of $5.44 billion, up 29.92% from the year-ago period.

For the full year, our Zacks Consensus Estimates are projecting earnings of $3.35 per share and revenue of $20.13 billion, which would represent changes of +25% and +27.44%, respectively, from the prior year.

Investors should also note any recent changes to analyst estimates for NFLX. These revisions typically reflect the latest short-term business trends, which can change frequently. With this in mind, we can consider positive estimate revisions a sign of optimism about 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. The Zacks Consensus EPS estimate remained stagnant within the past month. NFLX is currently sporting a Zacks Rank of #3 (Hold).

Valuation is also important, so investors should note that NFLX has a Forward P/E ratio of 100.66 right now. This valuation marks a premium compared to its industry's average Forward P/E of 14.31.

Meanwhile, NFLX's PEG ratio is currently 3.36. 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 industry currently had an average PEG ratio of 1.64 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 46, which puts it in the top 19% of all 250+ industries.

The Zacks Industry Rank gauges the strength of our individual 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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