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

Here's NETFLIX INC (NASDAQ:NFLX) for you, a growth stock our stock screener believes is undervalued. NASDAQ:NFLX is scoring impressively in terms of growth while demonstrating strong financials. On top of that, it remains attractively priced. Let's break it down further.

Exploring NASDAQ:NFLX's Growth

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 8 out of 10:

• The Earnings Per Share has grown by an impressive 70.39% over the past year.
• Measured over the past years, NFLX shows a very strong growth in Earnings Per Share. The EPS has been growing by 34.98% on average per year.
• The Revenue has grown by 13.00% in the past year. This is quite good.
• 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 24.29% yearly.
• Based on estimates for the next years, NFLX will show a quite strong growth in Revenue. The Revenue will grow by 10.95% on average per year.

Unpacking NASDAQ:NFLX's Valuation Rating

ChartMill assigns a proprietary Valuation Rating to each stock. The score is computed by evaluating various valuation aspects, like price to earnings and free cash flow, both absolutely as relative to the market and industry. NASDAQ:NFLX was assigned a score of 5 for valuation:

• Based on the Price/Earnings ratio, NFLX is valued a bit cheaper than the industry average as 72.22% of the companies are valued more expensively.
• Based on the Price/Forward Earnings ratio, NFLX is valued a bit cheaper than 72.22% of the companies in the same industry.
• 73.61% of the companies in the same industry are more expensive than NFLX, based on the Enterprise Value to EBITDA ratio.
• 66.67% of the companies in the same industry are more expensive than NFLX, based on the Price/Free Cash Flow ratio.
• NFLX's 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 31.14% in the coming years. This may justify a more expensive valuation.

How do we evaluate the Health 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 7 out of 10:

• NFLX has an Altman-Z score of 8.24. This indicates that NFLX is financially healthy and has little risk of bankruptcy at the moment.
• Looking at the Altman-Z score, with a value of 8.24, NFLX belongs to the top of the industry, outperforming 98.61% of the companies in the same industry.
• The Debt to FCF ratio of NFLX is 2.05, which is a good value as it means it would take NFLX, 2.05 years of fcf income to pay off all of its debts.
• NFLX has a better Debt to FCF ratio (2.05) than 84.72% of its industry peers.
• 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.
• 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 Examination for 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 (14.45%) than 95.83% of its industry peers.
• NFLX has a Return On Equity of 32.08%. This is amongst the best in the industry. NFLX outperforms 93.06% of its industry peers.
• NFLX has a Return On Invested Capital of 18.37%. This is amongst the best in the industry. NFLX outperforms 95.83% of its industry peers.
• The last Return On Invested Capital (18.37%) for NFLX is above the 3 year average (13.36%), which is a sign of increasing profitability.
• NFLX's Profit Margin of 19.54% is amongst the best of the industry. NFLX outperforms 95.83% of its industry peers.
• In the last couple of years the Profit Margin of NFLX has grown nicely.
• NFLX has a Operating Margin of 23.82%. This is amongst the best in the industry. NFLX outperforms 95.83% of its industry peers.
• NFLX's Operating Margin has improved in the last couple of years.
• In the last couple of years the Gross Margin of NFLX has grown nicely.

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

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

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.