NETFLIX INC (NFLX) Stock Fundamental Analysis

USA • Nasdaq • NASDAQ:NFLX • US64110L1061

83.455 USD

-0.03 (-0.04%)

Last: Feb 2, 2026, 10:51 AM

Fundamental Rating

Taking everything into account, NFLX scores 7 out of 10 in our fundamental rating. NFLX was compared to 80 industry peers in the Entertainment industry. NFLX scores excellent points on both the profitability and health parts. This is a solid base for a good stock. NFLX is growing strongly while it is still valued neutral. This is a good combination! This makes NFLX very considerable for growth and quality investing!

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1. Profitability

1.1 Basic Checks

NFLX had positive earnings in the past year.
In the past year NFLX had a positive cash flow from operations.
NFLX had positive earnings in each of the past 5 years.
NFLX had a positive operating cash flow in each of the past 5 years.

1.2 Ratios

NFLX's Return On Assets of 19.75% is amongst the best of the industry. NFLX outperforms 93.75% of its industry peers.
The Return On Equity of NFLX (41.26%) is better than 95.00% of its industry peers.
NFLX has a Return On Invested Capital of 25.95%. This is amongst the best in the industry. NFLX outperforms 98.75% of its industry peers.
The Average Return On Invested Capital over the past 3 years for NFLX is significantly above the industry average of 8.74%.
The last Return On Invested Capital (25.95%) for NFLX is above the 3 year average (20.73%), which is a sign of increasing profitability.

		Industry Rank	Sector Rank
ROA	19.75%
ROE	41.26%
ROIC	25.95%

ROA(3y)15.7%

ROA(5y)13.56%

ROE(3y)34.24%

ROE(5y)31.33%

ROIC(3y)20.73%

ROIC(5y)17.83%

1.3 Margins

With an excellent Profit Margin value of 24.30%, NFLX belongs to the best of the industry, outperforming 95.00% of the companies in the same industry.
In the last couple of years the Profit Margin of NFLX has grown nicely.
NFLX has a better Operating Margin (29.49%) than 97.50% of its industry peers.
NFLX's Operating Margin has improved in the last couple of years.
NFLX has a Gross Margin (48.49%) which is comparable to the rest of the industry.
In the last couple of years the Gross Margin of NFLX has grown nicely.

		Industry Rank	Sector Rank
OM	29.49%
PM (TTM)	24.3%
GM	48.49%

OM growth 3Y18.3%

OM growth 5Y5.33%

PM growth 3Y19.6%

PM growth 5Y17.08%

GM growth 3Y7.19%

GM growth 5Y2.29%

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ROA

ROE

ROIC

Operating and Profit Margin

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2. Health

2.1 Basic Checks

The Return on Invested Capital (ROIC) is well above the Cost of Capital (WACC), so NFLX is creating value.
The number of shares outstanding for NFLX has been increased compared to 1 year ago.
Compared to 5 years ago, NFLX has more shares outstanding
NFLX has a better debt/assets ratio than last year.

2.2 Solvency

An Altman-Z score of 10.06 indicates that NFLX is not in any danger for bankruptcy at the moment.
Looking at the Altman-Z score, with a value of 10.06, NFLX belongs to the top of the industry, outperforming 97.50% of the companies in the same industry.
The Debt to FCF ratio of NFLX is 1.53, which is an excellent value as it means it would take NFLX, only 1.53 years of fcf income to pay off all of its debts.
With an excellent Debt to FCF ratio value of 1.53, NFLX belongs to the best of the industry, outperforming 81.25% of the companies in the same industry.
NFLX has a Debt/Equity ratio of 0.51. This is a neutral value indicating NFLX is somewhat dependend on debt financing.
With a Debt to Equity ratio value of 0.51, NFLX perfoms like the industry average, outperforming 48.75% of the companies in the same industry.
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.

		Industry Rank	Sector Rank
Debt/Equity	0.51
Debt/FCF	1.53
Altman-Z	10.06

ROIC/WACC2.66

WACC9.74%

2.3 Liquidity

NFLX has a Current Ratio of 1.19. This is a normal value and indicates that NFLX is financially healthy and should not expect problems in meeting its short term obligations.
NFLX has a Current ratio of 1.19. This is comparable to the rest of the industry: NFLX outperforms 55.00% of its industry peers.
A Quick Ratio of 1.19 indicates that NFLX should not have too much problems paying its short term obligations.
Looking at the Quick ratio, with a value of 1.19, NFLX is in line with its industry, outperforming 56.25% of the companies in the same industry.
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.

		Industry Rank	Sector Rank
Current Ratio	1.19
Quick Ratio	1.19

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WACC

Debt/Equity

How to determine the health of a company

Altman-Z score

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3. Growth

3.1 Past

NFLX shows a strong growth in Earnings Per Share. In the last year, the EPS has been growing by 27.43%, which is quite impressive.
Measured over the past years, NFLX shows a very strong growth in Earnings Per Share. The EPS has been growing by 32.92% on average per year.
Looking at the last year, NFLX shows a quite strong growth in Revenue. The Revenue has grown by 15.85% in the last year.
Measured over the past years, NFLX shows a quite strong growth in Revenue. The Revenue has been growing by 12.57% on average per year.

EPS 1Y (TTM)27.43%

EPS 3Y36.44%

EPS 5Y32.92%

EPS Q2Q%31.15%

Revenue 1Y (TTM)15.85%

Revenue growth 3Y12.64%

Revenue growth 5Y12.57%

Sales Q2Q%17.61%

3.2 Future

NFLX is expected to show a strong growth in Earnings Per Share. In the coming years, the EPS will grow by 20.08% yearly.
The Revenue is expected to grow by 10.32% on average over the next years. This is quite good.

EPS Next Y30.7%

EPS Next 2Y25.56%

EPS Next 3Y22.44%

EPS Next 5Y20.08%

Revenue Next Year13.71%

Revenue Next 2Y12.52%

Revenue Next 3Y11.69%

Revenue Next 5Y10.32%

3.3 Evolution

The estimated forward EPS growth is still strong, although it is decreasing when compared to the stronger growth in the past years.
When comparing the Revenue growth rate of the last years to the growth rate of the upcoming years, we see that the growth is stable.

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4. Valuation

4.1 Price/Earnings Ratio

With a Price/Earnings ratio of 32.99, NFLX can be considered very expensive at the moment.
NFLX's Price/Earnings ratio is a bit cheaper when compared to the industry. NFLX is cheaper than 77.50% of the companies in the same industry.
The average S&P500 Price/Earnings ratio is at 28.32. NFLX is around the same levels.
A Price/Forward Earnings ratio of 25.27 indicates a quite expensive valuation of NFLX.
NFLX's Price/Forward Earnings ratio is a bit cheaper when compared to the industry. NFLX is cheaper than 77.50% of the companies in the same industry.
NFLX's Price/Forward Earnings ratio indicates a similar valuation than the S&P500 average which is at 25.57.

		Industry Rank	Sector Rank
PE	32.99
Fwd PE	25.27

4.2 Price Multiples

Based on the Enterprise Value to EBITDA ratio, NFLX is valued a bit cheaper than 73.75% of the companies in the same industry.
Compared to the rest of the industry, the Price/Free Cash Flow ratio of NFLX indicates a somewhat cheap valuation: NFLX is cheaper than 70.00% of the companies listed in the same industry.

		Industry Rank	Sector Rank
P/FCF	37.48
EV/EBITDA	11.97

4.3 Compensation for Growth

NFLX's PEG Ratio(NY), which compensates the Price/Earnings for growth, indicates a correct 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 22.44% in the coming years.