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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 $520.80, marking a -0.39% move from the previous day. This change lagged the S&P 500's daily gain of 0.71%. Meanwhile, the Dow gained 0.56%, and the Nasdaq, a tech-heavy index, added 0.95%.

Coming into today, shares of the internet video service had gained 1.37% in the past month. In that same time, the Consumer Discretionary sector gained 1.37%, while the S&P 500 gained 0.17%.

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. Our most recent consensus estimate is calling for quarterly revenue of $6.60 billion, up 20.79% from the year-ago period.

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. As such, positive estimate revisions reflect analyst optimism about the company's business and profitability.

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. Over the past month, the Zacks Consensus EPS estimate has moved 0.71% higher. NFLX currently has a Zacks Rank of #3 (Hold).

Digging into valuation, NFLX currently has a Forward P/E ratio of 57.53. For comparison, its industry has an average Forward P/E of 15.55, which means NFLX is trading at a premium to the group.

Also, we should mention that NFLX has a PEG ratio of 1.92. 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. Broadcast Radio and Television stocks are, on average, holding a PEG ratio of 1.54 based on yesterday's closing prices.

The Broadcast Radio and Television industry is part of the Consumer Discretionary sector. This group has a Zacks Industry Rank of 179, putting it in the bottom 30% 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.

Be sure to follow all of these stock-moving metrics, and many more, on Zacks.com.


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