We assign a fundamental rating of 7 out of 10 to NFLX. 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 showing excellent growth while it is valued at reasonable prices. Keep and eye on this one! These ratings could make NFLX a good candidate for growth and quality investing.

Quickly go to:

1. Profitability

2. Health

3. Growth

4. Valuation

5. Dividend

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.
Each year in the past 5 years NFLX has been profitable.
Each year in the past 5 years NFLX had a positive operating cash flow.

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.
With an excellent Return On Equity value of 41.26%, NFLX belongs to the best of the industry, outperforming 95.00% of the companies in the same industry.
The Return On Invested Capital of NFLX (25.95%) is better than 98.75% of its industry peers.
Measured over the past 3 years, the Average Return On Invested Capital for NFLX is significantly above the industry average of 8.74%.
The 3 year average ROIC (20.73%) for NFLX is below the current ROIC(25.95%), indicating increased profibility in the last year.

		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

NFLX has a Profit Margin of 24.30%. This is amongst the best in the industry. NFLX outperforms 95.00% of its industry peers.
NFLX's Profit Margin has improved in the last couple of years.
NFLX has a Operating Margin of 29.49%. This is amongst the best in the industry. NFLX outperforms 97.50% of its industry peers.
In the last couple of years the Operating Margin of NFLX has grown nicely.
NFLX has a Gross Margin (48.49%) which is in line with its industry peers.
NFLX's Gross Margin has improved in the last couple of years.

		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%

More info and screens

ROA

ROE

ROIC

Operating and Profit Margin

Show most profitable peers

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.
NFLX has more shares outstanding than it did 1 year ago.
NFLX has more shares outstanding than it did 5 years ago.
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.
NFLX has a debt to FCF ratio of 1.53. This is a very positive value and a sign of high solvency as it would only need 1.53 years to pay back of all of its debts.
NFLX has a Debt to FCF ratio of 1.53. This is amongst the best in the industry. NFLX outperforms 81.25% of its industry peers.
A Debt/Equity ratio of 0.51 indicates that NFLX is somewhat dependend on debt financing.
NFLX has a Debt to Equity ratio (0.51) which is comparable to the rest of the 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/WACC2.46

WACC10.54%

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.
The Current ratio of NFLX (1.19) is comparable to the rest of the industry.
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

More info and screens

WACC

Debt/Equity

How to determine the health of a company

Altman-Z score

Show peers with great health

3. Growth

3.1 Past

The Earnings Per Share has grown by an impressive 27.43% 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 32.92% on average per year.
The Revenue has grown by 15.85% in the past year. This is quite good.
NFLX shows quite a strong growth in Revenue. Measured over the last years, the Revenue has been growing by 12.57% yearly.

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.
NFLX is expected to show quite a strong growth in Revenue. In the coming years, the Revenue will grow by 10.32% yearly.

EPS Next Y30.7%

EPS Next 2Y25.56%

EPS Next 3Y22.44%

EPS Next 5Y20.08%

Revenue Next Year13.09%

Revenue Next 2Y12.23%

Revenue Next 3Y11.13%

Revenue Next 5Y10.32%

3.3 Evolution

Although the future EPS growth is still strong, it is not able to hold up the even more excellent growth rate of the past years.
The Revenue growth rate is stable: in the next years the growth will be about the same than in the last years.

More info and screens

Find the best growth stocks

Show best growing peers

4. Valuation

4.1 Price/Earnings Ratio

The Price/Earnings ratio is 34.04, which means the current valuation is very expensive for NFLX.
Based on the Price/Earnings ratio, NFLX is valued a bit cheaper than 77.50% of the companies in the same industry.
NFLX's Price/Earnings ratio indicates a valuation a bit more expensive than the S&P500 average which is at 27.21.
NFLX is valuated quite expensively with a Price/Forward Earnings ratio of 26.08.
77.50% of the companies in the same industry are more expensive than NFLX, based on the Price/Forward Earnings ratio.
The average S&P500 Price/Forward Earnings ratio is at 24.26. NFLX is around the same levels.

		Industry Rank	Sector Rank
PE	34.04
Fwd PE	26.08

4.2 Price Multiples

NFLX's Enterprise Value to EBITDA ratio is a bit cheaper when compared to the industry. NFLX is cheaper than 75.00% of the companies in the same industry.
NFLX's Price/Free Cash Flow ratio is a bit cheaper when compared to the industry. NFLX is cheaper than 70.00% of the companies in the same industry.

		Industry Rank	Sector Rank
P/FCF	38.68
EV/EBITDA	11.98

4.3 Compensation for Growth

The PEG Ratio(NY), which compensates the Price/Earnings for growth, indicates a correct valuation of the company.
NFLX has an outstanding profitability rating, which 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.