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

Discover NETFLIX INC (NASDAQ:NFLX), an undervalued growth gem identified by our stock screener. NASDAQ:NFLX is shining in terms of growth metrics, and it's also displaying strong financial health and profitability. What's more, it retains an appealing valuation. We'll break it down further.

Assessing 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:

• NFLX shows a strong growth in Earnings Per Share. In the last year, the EPS has been growing by 70.39%, which is quite impressive.
• 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 13.00%.
• NFLX shows quite a strong growth in Revenue. Measured over the last years, the Revenue has been growing by 16.38% yearly.
• The Earnings Per Share is expected to grow by 24.29% on average over the next years. This is a very strong growth
• The Revenue is expected to grow by 10.95% on average over the next years. This is quite good.

Valuation Assessment of NASDAQ:NFLX

An integral part of ChartMill's stock analysis is the Valuation Rating, which spans from 0 to 10. This rating evaluates diverse valuation factors, including price to earnings and cash flows, while considering the stock's profitability and growth. NASDAQ:NFLX has received a 5 out of 10:

• NFLX's Price/Earnings ratio is a bit cheaper when compared to the industry. NFLX is cheaper than 69.44% of the companies in the same industry.
• Compared to the rest of the industry, the Price/Forward Earnings ratio of NFLX indicates a somewhat cheap valuation: NFLX is cheaper than 70.83% of the companies listed in the same industry.
• Compared to the rest of the industry, the Enterprise Value to EBITDA ratio of NFLX indicates a somewhat cheap valuation: NFLX is cheaper than 70.83% of the companies listed in the same industry.
• 65.28% of the companies in the same industry are more expensive than NFLX, based on the Price/Free Cash Flow ratio.
• The low PEG Ratio(NY), which compensates the Price/Earnings for growth, indicates a rather cheap valuation of the company.
• 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 32.65% in the coming years.

ChartMill's Evaluation of Health

A critical element of ChartMill's stock evaluation is the Health Rating, which spans from 0 to 10. This rating considers multiple health factors, including liquidity and solvency, both in absolute terms and relative to industry peers. NASDAQ:NFLX has received a 7 out of 10:

• NFLX has an Altman-Z score of 8.29. This indicates that NFLX is financially healthy and has little risk of bankruptcy at the moment.
• NFLX has a better Altman-Z score (8.29) than 97.22% of its industry peers.
• NFLX has a debt to FCF ratio of 2.05. This is a good value and a sign of high solvency as NFLX would need 2.05 years to pay back of all of its debts.
• The Debt to FCF ratio of NFLX (2.05) is better than 83.33% 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 utilizes a Profitability Rating to assess stocks, scoring them on a scale of 0 to 10. This rating takes into account a variety of profitability ratios and margins, both in absolute terms and in comparison to industry peers. NASDAQ:NFLX has earned a 8 out of 10:

• NFLX has a Return On Assets of 14.45%. This is amongst the best in the industry. NFLX outperforms 95.83% of its industry peers.
• NFLX has a better Return On Equity (32.08%) than 94.44% of its industry peers.
• With an excellent Return On Invested Capital value of 18.37%, NFLX belongs to the best of the industry, outperforming 95.83% of the companies in the same industry.
• The 3 year average ROIC (13.36%) for NFLX is below the current ROIC(18.37%), indicating increased profibility in the last year.
• NFLX has a better Profit Margin (19.54%) than 94.44% of its industry peers.
• In the last couple of years the Profit Margin of NFLX has grown nicely.
• NFLX has a better Operating Margin (23.82%) than 94.44% 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.

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.

Keep in mind

Important Note: The content of this article is not intended as trading advice. It is essential to perform your own analysis and exercise caution when making trading decisions. The article presents observations created by automated analysis but does not guarantee any trading or investment outcomes. Always trade responsibly and make independent judgments.