NASDAQ:NFLX stands out as a growth opportunity that won't break the bank.

Last update: Jun 7, 2024

Take a closer look at NETFLIX INC (NASDAQ:NFLX), an affordable growth stock uncovered by our stock screener. NASDAQ:NFLX boasts strong growth prospects and excels in financial health indicators, all while maintaining a reasonable valuation. Let's break it down further.

How do we evaluate the Growth for NASDAQ:NFLX?

ChartMill employs its own Growth Rating system for all stocks. This score, ranging from 0 to 10, is derived by evaluating different growth factors, such as EPS and revenue growth, taking into account both past performance and future projections. NASDAQ:NFLX has earned a 8 for growth:

The Earnings Per Share has grown by an impressive 54.95% over the past year.
NFLX shows a strong growth in Earnings Per Share. Measured over the last years, the EPS has been growing by 34.98% yearly.
NFLX shows quite a strong growth in Revenue. In the last year, the Revenue has grown by 9.47%.
Measured over the past years, NFLX shows a quite strong growth in Revenue. The Revenue has been growing by 16.38% on average per year.
The Earnings Per Share is expected to grow by 24.27% on average over the next years. This is a very strong growth
The Revenue is expected to grow by 10.94% on average over the next years. This is quite good.

Valuation Assessment of NASDAQ:NFLX

ChartMill employs its own Valuation Rating system for all stocks. This score, ranging from 0 to 10, is determined by evaluating different valuation factors, including price to earnings and free cash flow, both in absolute terms and relative to the market and industry. NASDAQ:NFLX has earned a 5 for valuation:

Based on the Price/Earnings ratio, NFLX is valued a bit cheaper than the industry average as 71.05% of the companies are valued more expensively.
NFLX's Price/Forward Earnings ratio is a bit cheaper when compared to the industry. NFLX is cheaper than 69.74% of the companies in the same industry.
Based on the Enterprise Value to EBITDA ratio, NFLX is valued a bit cheaper than 75.00% of the companies in the same industry.
NFLX's Price/Free Cash Flow ratio is a bit cheaper when compared to the industry. NFLX is cheaper than 69.74% of the companies in the same industry.
The low PEG Ratio(NY), which compensates the Price/Earnings for growth, indicates a rather cheap valuation of the company.
NFLX has an outstanding profitability rating, which may justify a higher PE ratio.
NFLX's earnings are expected to grow with 31.34% in the coming years. This may justify a more expensive valuation.

Understanding NASDAQ:NFLX's Health

To gauge a stock's financial health, ChartMill utilizes a Health Rating on a scale of 0 to 10. This comprehensive evaluation encompasses liquidity and solvency, both in absolute terms and in comparison to industry peers. NASDAQ:NFLX has earned a 8 out of 10:

NFLX has an Altman-Z score of 8.08. This indicates that NFLX is financially healthy and has little risk of bankruptcy at the moment.
The Altman-Z score of NFLX (8.08) is better than 98.68% of its industry peers.
The Debt to FCF ratio of NFLX is 2.02, which is a good value as it means it would take NFLX, 2.02 years of fcf income to pay off all of its debts.
With an excellent Debt to FCF ratio value of 2.02, NFLX belongs to the best of the industry, outperforming 86.84% of the companies in the same industry.
Even though the debt/equity ratio score it not favorable for NFLX, it has very limited outstanding debt, so we won't put too much weight on the DE evaluation.
NFLX does not score too well on the current and quick ratio evaluation. However, as it has excellent solvency and profitability, these ratios do not necessarly indicate liquidity issues and need to be evaluated against the specifics of the business.

A Closer Look at Profitability for NASDAQ:NFLX

ChartMill employs its own Profitability Rating system for stock evaluation. This score, ranging from 0 to 10, is derived from an analysis of diverse profitability metrics and margins. In the case of NASDAQ:NFLX, the assigned 8 is noteworthy for profitability:

NFLX's Return On Assets of 13.18% is amongst the best of the industry. NFLX outperforms 94.74% of its industry peers.
NFLX has a Return On Equity of 30.12%. This is amongst the best in the industry. NFLX outperforms 93.42% of its industry peers.
NFLX has a better Return On Invested Capital (16.47%) than 96.05% of its industry peers.
The last Return On Invested Capital (16.47%) for NFLX is above the 3 year average (13.36%), which is a sign of increasing profitability.
NFLX has a better Profit Margin (18.42%) than 94.74% of its industry peers.
NFLX's Profit Margin has improved in the last couple of years.
Looking at the Operating Margin, with a value of 22.54%, NFLX belongs to the top of the industry, outperforming 94.74% 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.

Every day, new Affordable Growth stocks can be found on ChartMill in our Affordable Growth screener.

Check the latest full fundamental report of NFLX for a complete fundamental analysis.

Disclaimer

This article should in no way be interpreted as advice. The article is based on the observed metrics at the time of writing, but you should always make your own analysis and trade or invest at your own responsibility.