NETFLIX INC (NFLX) Stock Fundamental Analysis
NASDAQ:NFLX - Nasdaq - US64110L1061 - Common Stock
We assign a fundamental rating of 7 out of 10 to NFLX. NFLX was compared to 71 industry peers in the Entertainment industry. NFLX has outstanding health and profitabily ratings, belonging to the best of the industry. This is a solid base for any company. NFLX is not priced too expensively while it is growing strongly. Keep and eye on this one! With these ratings, NFLX could be worth investigating further for growth and quality investing!.
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.
In the past 5 years NFLX has always been profitable.
Of the past 5 years NFLX 4 years had a positive operating cash flow.
1.2 Ratios
NFLX has a Return On Assets of 14.88%. This is amongst the best in the industry. NFLX outperforms 95.45% of its industry peers.
NFLX's Return On Equity of 34.25% is amongst the best of the industry. NFLX outperforms 90.91% of its industry peers.
NFLX has a Return On Invested Capital of 19.19%. This is amongst the best in the industry. NFLX outperforms 96.97% of its industry peers.
The Average Return On Invested Capital over the past 3 years for NFLX is significantly below the industry average of 94.12%.
The last Return On Invested Capital (19.19%) for NFLX is above the 3 year average (13.36%), which is a sign of increasing profitability.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| ROA | 14.88% | ||
| ROE | 34.25% | ||
| ROIC | 19.19% |
ROA(3y)10.61%
ROA(5y)8.87%
ROE(3y)26.72%
ROE(5y)25.95%
ROIC(3y)13.36%
ROIC(5y)12.6%
1.3 Margins
NFLX's Profit Margin of 20.70% is amongst the best of the industry. NFLX outperforms 93.94% of its industry peers.
In the last couple of years the Profit Margin of NFLX has grown nicely.
NFLX has a better Operating Margin (25.65%) than 95.45% of its industry peers.
In the last couple of years the Operating Margin of NFLX has grown nicely.
NFLX has a Gross Margin (45.25%) which is in line with its industry peers.
In the last couple of years the Gross Margin of NFLX has grown nicely.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| OM | 25.65% | ||
| PM (TTM) | 20.7% | ||
| GM | 45.25% |
OM growth 3Y-3.22%
OM growth 5Y15.2%
PM growth 3Y13.23%
PM growth 5Y15.9%
GM growth 3Y-1.37%
GM growth 5Y2.4%
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 less shares outstanding than it did 1 year ago.
NFLX has less shares outstanding than it did 5 years ago.
The debt/assets ratio for NFLX is higher compared to a year ago.
2.2 Solvency
An Altman-Z score of 9.59 indicates that NFLX is not in any danger for bankruptcy at the moment.
NFLX's Altman-Z score of 9.59 is amongst the best of the industry. NFLX outperforms 95.45% of its industry peers.
The Debt to FCF ratio of NFLX is 2.24, which is a good value as it means it would take NFLX, 2.24 years of fcf income to pay off all of its debts.
NFLX's Debt to FCF ratio of 2.24 is fine compared to the rest of the industry. NFLX outperforms 78.79% of its industry peers.
NFLX has a Debt/Equity ratio of 0.62. This is a neutral value indicating NFLX is somewhat dependend on debt financing.
NFLX's Debt to Equity ratio of 0.62 is in line compared to the rest of the industry. NFLX outperforms 46.97% 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.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Debt/Equity | 0.62 | ||
| Debt/FCF | 2.24 | ||
| Altman-Z | 9.59 |
ROIC/WACC2.12
WACC9.05%
2.3 Liquidity
NFLX has a Current Ratio of 1.13. 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 (1.13) is comparable to the rest of the industry.
A Quick Ratio of 1.13 indicates that NFLX should not have too much problems paying its short term obligations.
NFLX has a Quick ratio (1.13) which is comparable to the rest of the 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 | 1.13 | ||
| Quick Ratio | 1.13 |
3. Growth
3.1 Past
The Earnings Per Share has grown by an impressive 76.35% over the past year.
The Earnings Per Share has been growing by 34.98% on average over the past years. This is a very strong growth
The Revenue has grown by 14.80% in the past year. This is quite good.
The Revenue has been growing by 16.38% on average over the past years. This is quite good.
EPS 1Y (TTM)76.35%
EPS 3Y25.4%
EPS 5Y34.98%
EPS Q2Q%44.77%
Revenue 1Y (TTM)14.8%
Revenue growth 3Y10.5%
Revenue growth 5Y16.38%
Sales Q2Q%15.02%
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 25.42% on average per year.
NFLX is expected to show quite a strong growth in Revenue. In the coming years, the Revenue will grow by 11.33% yearly.
EPS Next Y67.88%
EPS Next 2Y42.19%
EPS Next 3Y34.06%
EPS Next 5Y25.42%
Revenue Next Year15.7%
Revenue Next 2Y14.08%
Revenue Next 3Y13.02%
Revenue Next 5Y11.33%
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.
Although the future Revenue growth is still strong, it is not able to hold up the even more excellent growth rate of the past years.
4. Valuation
4.1 Price/Earnings Ratio
With a Price/Earnings ratio of 49.22, NFLX can be considered very expensive at the moment.
66.67% of the companies in the same industry are more expensive than NFLX, based on the Price/Earnings ratio.
Compared to an average S&P500 Price/Earnings ratio of 28.29, NFLX is valued quite expensively.
The Price/Forward Earnings ratio is 35.82, which means the current valuation is very expensive for NFLX.
Compared to the rest of the industry, the Price/Forward Earnings ratio of NFLX indicates a somewhat cheap valuation: NFLX is cheaper than 69.70% of the companies listed in the same industry.
NFLX is valuated rather expensively when we compare the Price/Forward Earnings ratio to 24.44, which is the current average of the S&P500 Index.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| PE | 49.22 | ||
| Fwd PE | 35.82 |
4.2 Price Multiples
Based on the Enterprise Value to EBITDA ratio, NFLX is valued a bit cheaper than the industry average as 65.15% of the companies are valued more expensively.
Based on the Price/Free Cash Flow ratio, NFLX is valued a bit cheaper than the industry average as 60.61% of the companies are valued more expensively.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| P/FCF | 52.18 | ||
| EV/EBITDA | 14.95 |
4.3 Compensation for Growth
NFLX's 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.
NFLX's earnings are expected to grow with 34.06% in the coming years. This may justify a more expensive valuation.
PEG (NY)0.73
PEG (5Y)1.41
EPS Next 2Y42.19%
EPS Next 3Y34.06%
5. Dividend
5.1 Amount
NFLX does not give a dividend.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Dividend Yield | N/A |
NETFLIX INC
NASDAQ:NFLX (1/21/2025, 7:03:28 PM)
After market: 993.76 +124.08 (+14.27%)869.68
+11.58 (+1.35%)
Chartmill FA Rating
GICS SectorCommunication Services
GICS IndustryGroupMedia & Entertainment
GICS IndustryEntertainment
Earnings (Last)
Earnings (Next)
Inst Owners85.66%
Inst Owner Change-1.61%
Ins Owners0.02%
Ins Owner Change4.71%
Market Cap371.75B
Analysts77.09
Price Target850.41 (-2.22%)
Short Float %1.63%
Short Ratio2.34
Dividend
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Dividend Yield | N/A |
Yearly DividendN/A
Dividend Growth(5Y)N/A
DPN/A
Div Incr Years0
Div Non Decr Years0
Ex-DateN/A
Surprises & Revisions
EPS beat(2)2
Avg EPS beat(2)2.18%
Min EPS beat(2)0.87%
Max EPS beat(2)3.48%
EPS beat(4)3
Avg EPS beat(4)3.03%
Min EPS beat(4)-6.71%
Max EPS beat(4)14.46%
EPS beat(8)5
Avg EPS beat(8)-5.67%
EPS beat(12)9
Avg EPS beat(12)6.88%
EPS beat(16)11
Avg EPS beat(16)6.55%
Revenue beat(2)0
Avg Revenue beat(2)-1.53%
Min Revenue beat(2)-1.64%
Max Revenue beat(2)-1.41%
Revenue beat(4)0
Avg Revenue beat(4)-1.17%
Min Revenue beat(4)-1.64%
Max Revenue beat(4)-0.68%
Revenue beat(8)0
Avg Revenue beat(8)-1.73%
Revenue beat(12)0
Avg Revenue beat(12)-1.85%
Revenue beat(16)0
Avg Revenue beat(16)-1.82%
PT rev (1m)5.24%
PT rev (3m)19.43%
EPS NQ rev (1m)0%
EPS NQ rev (3m)16.88%
EPS NY rev (1m)0%
EPS NY rev (3m)3.46%
Revenue NQ rev (1m)0%
Revenue NQ rev (3m)0.62%
Revenue NY rev (1m)0%
Revenue NY rev (3m)0.46%
Valuation
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| PE | 49.22 | ||
| Fwd PE | 35.82 | ||
| P/S | 9.89 | ||
| P/FCF | 52.18 | ||
| P/OCF | 49.65 | ||
| P/B | 16.36 | ||
| P/tB | N/A | ||
| EV/EBITDA | 14.95 |
EPS(TTM)17.67
EY2.03%
EPS(NY)24.28
Fwd EY2.79%
FCF(TTM)16.67
FCFY1.92%
OCF(TTM)17.52
OCFY2.01%
SpS87.93
BVpS53.15
TBVpS-22.12
PEG (NY)0.73
PEG (5Y)1.41
Profitability
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| ROA | 14.88% | ||
| ROE | 34.25% | ||
| ROCE | 23.19% | ||
| ROIC | 19.19% | ||
| ROICexc | 24.66% | ||
| ROICexgc | 4547.46% | ||
| OM | 25.65% | ||
| PM (TTM) | 20.7% | ||
| GM | 45.25% | ||
| FCFM | 18.96% |
ROA(3y)10.61%
ROA(5y)8.87%
ROE(3y)26.72%
ROE(5y)25.95%
ROIC(3y)13.36%
ROIC(5y)12.6%
ROICexc(3y)16.03%
ROICexc(5y)15.61%
ROICexgc(3y)N/A
ROICexgc(5y)N/A
ROCE(3y)16.15%
ROCE(5y)15.22%
ROICexcg growth 3YN/A
ROICexcg growth 5Y24.45%
ROICexc growth 3Y-4.56%
ROICexc growth 5Y15.74%
OM growth 3Y-3.22%
OM growth 5Y15.2%
PM growth 3Y13.23%
PM growth 5Y15.9%
GM growth 3Y-1.37%
GM growth 5Y2.4%
F-Score7
Asset Turnover0.72
Health
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Debt/Equity | 0.62 | ||
| Debt/FCF | 2.24 | ||
| Debt/EBITDA | 0.57 | ||
| Cap/Depr | 2.38% | ||
| Cap/Sales | 0.96% | ||
| Interest Coverage | 250 | ||
| Cash Conversion | 30.11% | ||
| Profit Quality | 91.57% | ||
| Current Ratio | 1.13 | ||
| Quick Ratio | 1.13 | ||
| Altman-Z | 9.59 |
F-Score7
WACC9.05%
ROIC/WACC2.12
Cap/Depr(3y)3.15%
Cap/Depr(5y)3.34%
Cap/Sales(3y)1.36%
Cap/Sales(5y)1.47%
Profit Quality(3y)N/A
Profit Quality(5y)N/A
High Growth Momentum
Growth
EPS 1Y (TTM)76.35%
EPS 3Y25.4%
EPS 5Y34.98%
EPS Q2Q%44.77%
EPS Next Y67.88%
EPS Next 2Y42.19%
EPS Next 3Y34.06%
EPS Next 5Y25.42%
Revenue 1Y (TTM)14.8%
Revenue growth 3Y10.5%
Revenue growth 5Y16.38%
Sales Q2Q%15.02%
Revenue Next Year15.7%
Revenue Next 2Y14.08%
Revenue Next 3Y13.02%
Revenue Next 5Y11.33%
EBIT growth 1Y60.47%
EBIT growth 3Y6.94%
EBIT growth 5Y34.08%
EBIT Next Year64.05%
EBIT Next 3Y32.13%
EBIT Next 5Y24.16%
FCF growth 1Y893.72%
FCF growth 3Y53.12%
FCF growth 5YN/A
OCF growth 1Y535.02%
OCF growth 3Y44.18%
OCF growth 5YN/A