Why NASDAQ:NFLX Is a Promising High-Growth Stock in the Midst of Consolidation.

For growth-minded investors, high revenue and EPS growth are key criteria. Today, we'll examine whether NETFLIX INC (NASDAQ:NFLX) fits the bill for growth investing, particularly as it forms a base and hints at a potential breakout. Remember, due diligence is essential, but NETFLIX INC has caught our attention on our screen for growth with base formation. It may warrant additional investigation.

Deciphering NASDAQ:NFLX's Growth Rating

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.
• 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%.
• 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.
• 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.

How do we evaluate the Health for NASDAQ:NFLX?

ChartMill utilizes a Health Rating to assess stocks, scoring them on a scale of 0 to 10. This rating takes into account a variety of liquidity and solvency ratios, both in absolute terms and in comparison to industry peers. NASDAQ:NFLX has earned a 7 out of 10:

• NFLX has an Altman-Z score of 9.05. This indicates that NFLX is financially healthy and has little risk of bankruptcy at the moment.
• NFLX's Altman-Z score of 9.05 is amongst the best of the industry. NFLX outperforms 98.57% of its industry peers.
• 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 Debt to FCF ratio of 2.05. This is amongst the best in the industry. NFLX outperforms 84.29% 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.
• 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.

What does the Profitability looks like 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:

• With an excellent Return On Assets value of 14.45%, NFLX belongs to the best of the industry, outperforming 92.86% of the companies in the same industry.
• With an excellent Return On Equity value of 32.08%, NFLX belongs to the best of the industry, outperforming 94.29% of the companies in the same industry.
• Looking at the Return On Invested Capital, with a value of 18.37%, NFLX belongs to the top of the industry, outperforming 95.71% 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 94.29% of its industry peers.
• NFLX's Profit Margin has improved in the last couple of years.
• The Operating Margin of NFLX (23.82%) is better than 94.29% of its industry peers.
• 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.

Why is NASDAQ:NFLX a setup?

Next to the Technical Rating, the Setup Rating of a stock determines to which extend the stock is consolidating. This score also ranges from 0 to 10 and is updated daily. The setup score evaluates various short term technical indicators. For NASDAQ:NFLX this score is currently 7:

Besides having an excellent technical rating, NFLX also presents a decent setup pattern. Prices have been consolidating lately and the volatility has been reduced. There is a support zone below the current price at 714.17, a Stop Loss order could be placed below this zone.

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

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

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

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.