NASDAQ:NFLX—Positioned as a High-Growth Stock, Ready for a Potential Breakout.

Groth investors are looking for stocks showing high revenue and EPS growth. We will have a look here to see if NETFLIX INC (NASDAQ:NFLX) is suited for growth investing, while it is forming a base and may be ready to breakout. Investors should of course do their own research, but we spotted NETFLIX INC showing up in our growth with base formation screen, so it may be worth spending some more time on it.

Growth Assessment of NASDAQ:NFLX

To evaluate a stock's growth potential, ChartMill utilizes a Growth Rating on a scale of 0 to 10. This comprehensive assessment considers various growth aspects, including historical and estimated EPS and revenue growth. NASDAQ:NFLX has achieved a 8 out of 10:

• The Earnings Per Share has grown by an impressive 54.95% 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
• NFLX shows quite a strong growth in Revenue. In the last year, the Revenue has grown by 9.47%.
• The Revenue has been growing by 16.38% on average over the past years. This is quite good.
• Based on estimates for the next years, NFLX will show a very strong growth in Earnings Per Share. The EPS will grow by 24.29% on average per year.
• NFLX is expected to show quite a strong growth in Revenue. In the coming years, the Revenue will grow by 10.95% yearly.

Assessing Health Metrics for NASDAQ:NFLX

ChartMill assigns a Health Rating to every stock. This score ranges from 0 to 10 and evaluates the different health aspects like liquidity and solvency, both absolutely, but also relative to the industry peers. NASDAQ:NFLX scores a 8 out of 10:

• NFLX has an Altman-Z score of 8.42. This indicates that NFLX is financially healthy and has little risk of bankruptcy at the moment.
• NFLX's Altman-Z score of 8.42 is amongst the best of the industry. NFLX outperforms 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.
• NFLX has a Debt to FCF ratio of 2.02. This is amongst the best in the industry. NFLX outperforms 85.53% 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

Discover ChartMill's exclusive Profitability Rating, a proprietary metric that assesses stocks on a scale of 0 to 10. It takes into consideration various profitability ratios and margins, both in absolute terms and relative to industry peers. Notably, NASDAQ:NFLX has achieved a 8:

• NFLX has a better Return On Assets (13.18%) than 94.74% of its industry peers.
• The Return On Equity of NFLX (30.12%) is better than 93.42% of its industry peers.
• Looking at the Return On Invested Capital, with a value of 16.47%, NFLX belongs to the top of the industry, outperforming 96.05% of the companies in the same industry.
• 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's Profit Margin of 18.42% is amongst the best of the industry. NFLX outperforms 94.74% of its industry peers.
• NFLX's Profit Margin has improved in the last couple of years.
• NFLX's Operating Margin of 22.54% is amongst the best of the industry. NFLX outperforms 94.74% of its industry peers.
• NFLX's Operating Margin has improved in the last couple of years.
• NFLX's Gross Margin has improved in the last couple of years.

Looking at the Setup

Besides the Technical Rating, ChartMill also assign a Setup Rating to every stock. This setup score also ranges from 0 to 10 and determines to which extend the stock is consolidating. This is achieved by evaluating multiple short term technical indicators. NASDAQ:NFLX currently has a 7 as setup rating:

Besides having an excellent technical rating, NFLX also presents a decent setup pattern. We see reduced volatility while prices have been consolidating in the most recent period. There is a resistance zone just above the current price starting at 685.61. Right above this resistance zone may be a good entry point. Another positive sign is the recent Pocket Pivot signal.

More Strong Growth stocks can be found in our Strong Growth screener.

For an up to date full fundamental analysis you can check the fundamental report of NFLX

For an up to date full technical analysis you can check the technical report of NFLX

Keep in mind

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.