While growth is established for NASDAQ:NFLX, the stock's valuation remains reasonable.

Our stock screener has spotted NETFLIX INC (NASDAQ:NFLX) as a growth stock which is not overvalued. NASDAQ:NFLX is scoring great on several growth aspects while it also shows decent health and profitability. At the same time it remains remains attractively priced. We'll dive into each aspect below.

Growth Assessment of NASDAQ:NFLX

ChartMill assigns a Growth Rating to every stock. This score ranges from 0 to 10 and evaluates the different growth aspects like EPS and Revenue, both in the past as in the future. NASDAQ:NFLX scores a 7 out of 10:

• The Earnings Per Share has grown by an impressive 20.70% over the past year.
• The Earnings Per Share has been growing by 34.98% on average over the past years. This is a very strong growth
• The Revenue has been growing by 16.38% on average over the past years. This is quite good.
• NFLX is expected to show a strong growth in Earnings Per Share. In the coming years, the EPS will grow by 22.73% yearly.
• NFLX is expected to show quite a strong growth in Revenue. In the coming years, the Revenue will grow by 10.31% yearly.

Valuation Insights: NASDAQ:NFLX

ChartMill assigns a Valuation Rating to every stock. This score ranges from 0 to 10 and evaluates the different valuation aspects and compares the price to earnings and cash flows, while taking into account profitability and growth. NASDAQ:NFLX scores a 5 out of 10:

• Based on the Price/Earnings ratio, NFLX is valued a bit cheaper than the industry average as 72.73% of the companies are valued more expensively.
• Based on the Price/Forward Earnings ratio, NFLX is valued a bit cheaper than the industry average as 76.62% of the companies are valued more expensively.
• 76.62% of the companies in the same industry are more expensive than NFLX, based on the Enterprise Value to EBITDA ratio.
• Compared to the rest of the industry, the Price/Free Cash Flow ratio of NFLX indicates a somewhat cheap valuation: NFLX is cheaper than 74.03% of the companies listed in the same industry.
• The excellent profitability rating of NFLX may justify a higher PE ratio.
• A more expensive valuation may be justified as NFLX's earnings are expected to grow with 29.08% in the coming years.

How We Gauge Health for NASDAQ:NFLX

ChartMill employs a unique Health Rating system for all stocks. This rating, ranging from 0 to 10, is determined by analyzing various liquidity and solvency ratios. For NASDAQ:NFLX, the assigned 8 for health provides valuable insights:

• NFLX has an Altman-Z score of 6.96. This indicates that NFLX is financially healthy and has little risk of bankruptcy at the moment.
• The Altman-Z score of NFLX (6.96) is better than 94.81% of its industry peers.
• NFLX has a debt to FCF ratio of 2.10. This is a good value and a sign of high solvency as NFLX would need 2.10 years to pay back of all of its debts.
• NFLX has a better Debt to FCF ratio (2.10) than 88.31% of its industry peers.
• Although NFLX does not score too well on debt/equity it has very limited outstanding debt, which is well covered by the FCF. We will not put too much weight on the debt/equity number as it may be because of low equity, which could be a consequence of a share buyback program for instance. This needs to be investigated.
• The current and quick ratio evaluation for NFLX is rather negative, while it does have excellent solvency and profitability. These ratios do not necessarly indicate liquidity issues and need to be evaluated against the specifics of the business.

Profitability Assessment of NASDAQ:NFLX

ChartMill's Profitability Rating offers a unique perspective on stock analysis, providing scores from 0 to 10. These ratings consider a wide range of profitability metrics and margins, both in comparison to industry peers and on their own merits. For NASDAQ:NFLX, the assigned 8 is a significant indicator of profitability:

• NFLX's Return On Assets of 11.10% is amongst the best of the industry. NFLX outperforms 93.51% of its industry peers.
• NFLX has a Return On Equity of 26.27%. This is amongst the best in the industry. NFLX outperforms 93.51% of its industry peers.
• The Return On Invested Capital of NFLX (14.43%) is better than 93.51% of its industry peers.
• The 3 year average ROIC (13.36%) for NFLX is below the current ROIC(14.43%), indicating increased profibility in the last year.
• NFLX's Profit Margin of 16.04% is amongst the best of the industry. NFLX outperforms 90.91% of its industry peers.
• NFLX's Profit Margin has improved in the last couple of years.
• With an excellent Operating Margin value of 20.62%, NFLX belongs to the best of the industry, outperforming 92.21% of the companies in the same industry.
• In the last couple of years the Operating Margin of NFLX has grown nicely.
• In the last couple of years the Gross Margin of NFLX has grown nicely.

Our Affordable Growth screener lists more Affordable Growth stocks and is updated daily.

Our latest full fundamental report of NFLX contains the most current fundamental analsysis.

Disclaimer

This is not investing advice! The article highlights some of the observations at the time of writing, but you should always make your own analysis and invest based on your own insights.