NFLX gets a fundamental rating of 7 out of 10. The analysis compared the fundamentals against 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

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.
NFLX had positive earnings in each of the past 5 years.
In the past 5 years NFLX always reported a positive cash flow from operatings.

1.2 Ratios

NFLX has a Return On Assets of 19.75%. This is amongst the best in the industry. NFLX outperforms 93.75% of its industry peers.
NFLX has a Return On Equity of 41.26%. This is amongst the best in the industry. NFLX outperforms 95.00% of its industry peers.
The Return On Invested Capital of NFLX (25.95%) is better than 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

NFLX's Profit Margin of 24.30% is amongst the best of 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 comparable to the rest of the industry.
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%

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ROA

ROE

ROIC

Operating and Profit Margin

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2. Health

2.1 Basic Checks

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

2.2 Solvency

NFLX has an Altman-Z score of 10.16. This indicates that NFLX is financially healthy and has little risk of bankruptcy at the moment.
With an excellent Altman-Z score value of 10.16, NFLX belongs to the best of the industry, outperforming 98.75% 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's Debt to FCF ratio of 1.53 is amongst the best of the industry. NFLX outperforms 81.25% of its industry peers.
NFLX has a Debt/Equity ratio of 0.51. This is a neutral value indicating 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.
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.

		Industry Rank	Sector Rank
Debt/Equity	0.51
Debt/FCF	1.53
Altman-Z	10.16

ROIC/WACC2.65

WACC9.8%

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.
Looking at the Current ratio, with a value of 1.19, NFLX is in line with its industry, outperforming 55.00% of the companies in the same industry.
NFLX has a Quick 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 Quick ratio of 1.19. This is comparable to the rest of the industry: NFLX outperforms 56.25% of its industry peers.
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

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

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

Based on estimates for the next years, NFLX will show a very strong growth in Earnings Per Share. The EPS will grow by 20.08% on average per year.
Based on estimates for the next years, NFLX will show a quite strong growth in Revenue. The Revenue will grow by 10.32% on average per year.

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.
The Revenue growth rate is stable: in the next years the growth will be about the same than in the last years.

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4. Valuation

4.1 Price/Earnings Ratio

A Price/Earnings ratio of 33.45 indicates a quite expensive valuation of NFLX.
Based on the Price/Earnings ratio, NFLX is valued a bit cheaper than 77.50% of the companies in the same industry.
NFLX is valuated at similar levels of the S&P average when we compare the Price/Earnings ratio to 28.60, which is the current average of the S&P500 Index.
NFLX is valuated quite expensively with a Price/Forward Earnings ratio of 25.63.
Compared to the rest of the industry, the Price/Forward Earnings ratio of NFLX indicates a somewhat cheap valuation: NFLX is cheaper than 76.25% of the companies listed in the same industry.
When comparing the Price/Forward Earnings ratio of NFLX to the average of the S&P500 Index (25.83), we can say NFLX is valued inline with the index average.

		Industry Rank	Sector Rank
PE	33.45
Fwd PE	25.63

4.2 Price Multiples

NFLX's Enterprise Value to EBITDA ratio is a bit cheaper when compared to the industry. NFLX is cheaper than 72.50% of the companies in the same industry.
70.00% of the companies in the same industry are more expensive than NFLX, based on the Price/Free Cash Flow ratio.

		Industry Rank	Sector Rank
P/FCF	38.01
EV/EBITDA	12.13

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.
NFLX's earnings are expected to grow with 22.44% in the coming years. This may justify a more expensive valuation.