NETFLIX INC (NFLX) Stock Fundamental Analysis
NASDAQ:NFLX - Nasdaq - US64110L1061 - Common Stock - Currency: USD
We assign a fundamental rating of 7 out of 10 to NFLX. NFLX was compared to 72 industry peers in the Entertainment industry. NFLX gets an excellent profitability rating and is at the same time showing great financial health properties. NFLX is not priced too expensively while it is growing strongly. Keep and eye on this one! These ratings could make NFLX a good candidate 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.
NFLX had a positive operating cash flow in each of the past 5 years.
1.2 Ratios
With an excellent Return On Assets value of 17.80%, NFLX belongs to the best of the industry, outperforming 97.22% of the companies in the same industry.
NFLX has a better Return On Equity (38.58%) than 93.06% of its industry peers.
NFLX has a better Return On Invested Capital (22.93%) than 97.22% of its industry peers.
Measured over the past 3 years, the Average Return On Invested Capital for NFLX is significantly below the industry average of 22.90%.
The 3 year average ROIC (16.17%) for NFLX is below the current ROIC(22.93%), indicating increased profibility in the last year.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| ROA | 17.8% | ||
| ROE | 38.58% | ||
| ROIC | 22.93% |
ROA(3y)12.2%
ROA(5y)11.02%
ROE(3y)27.7%
ROE(5y)28.07%
ROIC(3y)16.17%
ROIC(5y)15.85%
1.3 Margins
The Profit Margin of NFLX (23.07%) is better than 94.44% of its industry peers.
NFLX's Profit Margin has improved in the last couple of years.
NFLX's Operating Margin of 27.71% is amongst the best of the industry. NFLX outperforms 97.22% of its industry peers.
NFLX's Operating Margin has improved in the last couple of years.
NFLX has a Gross Margin of 46.92%. This is comparable to the rest of the industry: NFLX outperforms 54.17% of its industry peers.
NFLX's Gross Margin has improved in the last couple of years.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| OM | 27.71% | ||
| PM (TTM) | 23.07% | ||
| GM | 46.92% |
OM growth 3Y8.59%
OM growth 5Y15.63%
PM growth 3Y9.04%
PM growth 5Y19.25%
GM growth 3Y3.42%
GM growth 5Y3.77%
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.
Compared to 1 year ago, NFLX has less shares outstanding
NFLX has less shares outstanding than it did 5 years ago.
Compared to 1 year ago, NFLX has an improved debt to assets ratio.
2.2 Solvency
An Altman-Z score of 14.25 indicates that NFLX is not in any danger for bankruptcy at the moment.
NFLX's Altman-Z score of 14.25 is amongst the best of the industry. NFLX outperforms 97.22% of its industry peers.
The Debt to FCF ratio of NFLX is 2.02, which is a good value as it means it would take NFLX, 2.02 years of fcf income to pay off all of its debts.
NFLX has a better Debt to FCF ratio (2.02) than 76.39% of its industry peers.
NFLX has a Debt/Equity ratio of 0.58. This is a neutral value indicating NFLX is somewhat dependend on debt financing.
With a Debt to Equity ratio value of 0.58, NFLX perfoms like the industry average, outperforming 47.22% 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 | 0.58 | ||
| Debt/FCF | 2.02 | ||
| Altman-Z | 14.25 |
ROIC/WACC2.59
WACC8.85%
2.3 Liquidity
NFLX has a Current Ratio of 1.20. 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 1.20, NFLX is in line with its industry, outperforming 59.72% of the companies in the same industry.
A Quick Ratio of 1.20 indicates that NFLX should not have too much problems paying its short term obligations.
The Quick ratio of NFLX (1.20) is better than 62.50% of its industry peers.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Current Ratio | 1.2 | ||
| Quick Ratio | 1.2 |
3. Growth
3.1 Past
The Earnings Per Share has grown by an impressive 46.84% over the past year.
The Earnings Per Share has been growing by 36.86% on average over the past years. This is a very strong growth
The Revenue has grown by 15.00% in the past year. This is quite good.
Measured over the past years, NFLX shows a quite strong growth in Revenue. The Revenue has been growing by 14.11% on average per year.
EPS 1Y (TTM)46.84%
EPS 3Y20.83%
EPS 5Y36.86%
EPS Q2Q%25.19%
Revenue 1Y (TTM)15%
Revenue growth 3Y9.51%
Revenue growth 5Y14.11%
Sales Q2Q%12.51%
3.2 Future
NFLX is expected to show a strong growth in Earnings Per Share. In the coming years, the EPS will grow by 20.15% yearly.
The Revenue is expected to grow by 11.09% on average over the next years. This is quite good.
EPS Next Y31.14%
EPS Next 2Y26.15%
EPS Next 3Y24.35%
EPS Next 5Y20.15%
Revenue Next Year14.37%
Revenue Next 2Y13.28%
Revenue Next 3Y12.53%
Revenue Next 5Y11.09%
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
A Price/Earnings ratio of 60.95 indicates a quite expensive valuation of NFLX.
Based on the Price/Earnings ratio, NFLX is valued a bit cheaper than 70.83% of the companies in the same industry.
The average S&P500 Price/Earnings ratio is at 27.29. NFLX is valued rather expensively when compared to this.
Based on the Price/Forward Earnings ratio of 40.86, the valuation of NFLX can be described as expensive.
Based on the Price/Forward Earnings ratio, NFLX is valued a bit cheaper than the industry average as 66.67% of the companies are valued more expensively.
Compared to an average S&P500 Price/Forward Earnings ratio of 21.74, NFLX is valued quite expensively.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| PE | 60.95 | ||
| Fwd PE | 40.86 |
4.2 Price Multiples
Based on the Enterprise Value to EBITDA ratio, NFLX is valued a bit cheaper than the industry average as 62.50% of the companies are valued more expensively.
NFLX's Price/Free Cash Flow ratio is in line with the industry average.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| P/FCF | 73.71 | ||
| EV/EBITDA | 20.72 |
4.3 Compensation for Growth
The high PEG Ratio(NY), which compensates the Price/Earnings for growth, indicates an expensive 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 24.35% in the coming years. This may justify a more expensive valuation.
PEG (NY)1.96
PEG (5Y)1.65
EPS Next 2Y26.15%
EPS Next 3Y24.35%
5. Dividend
5.1 Amount
No dividends for NFLX!.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Dividend Yield | N/A |
1289.62
-7.56 (-0.58%)
Chartmill FA Rating
GICS SectorCommunication Services
GICS IndustryGroupMedia & Entertainment
GICS IndustryEntertainment
Earnings (Last)
Earnings (Next)
Inst Owners86.57%
Inst Owner Change-0.01%
Ins Owners0.03%
Ins Owner Change-1.63%
Market Cap548.82B
Analysts80.71
Price Target1210.69 (-6.12%)
Short Float %1.68%
Short Ratio1.9
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)1
Avg EPS beat(2)6.61%
Min EPS beat(2)-0.27%
Max EPS beat(2)13.49%
EPS beat(4)3
Avg EPS beat(4)4.4%
Min EPS beat(4)-0.27%
Max EPS beat(4)13.49%
EPS beat(8)6
Avg EPS beat(8)5.37%
EPS beat(12)8
Avg EPS beat(12)1.45%
EPS beat(16)11
Avg EPS beat(16)6.88%
Revenue beat(2)0
Avg Revenue beat(2)-1.18%
Min Revenue beat(2)-1.7%
Max Revenue beat(2)-0.66%
Revenue beat(4)0
Avg Revenue beat(4)-1.35%
Min Revenue beat(4)-1.7%
Max Revenue beat(4)-0.66%
Revenue beat(8)0
Avg Revenue beat(8)-1.52%
Revenue beat(12)0
Avg Revenue beat(12)-1.65%
Revenue beat(16)0
Avg Revenue beat(16)-1.76%
PT rev (1m)5.76%
PT rev (3m)9.79%
EPS NQ rev (1m)0.03%
EPS NQ rev (3m)11.9%
EPS NY rev (1m)0.02%
EPS NY rev (3m)2.97%
Revenue NQ rev (1m)0%
Revenue NQ rev (3m)1.18%
Revenue NY rev (1m)0.02%
Revenue NY rev (3m)0.31%
Valuation
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| PE | 60.95 | ||
| Fwd PE | 40.86 | ||
| P/S | 13.66 | ||
| P/FCF | 73.71 | ||
| P/OCF | 69.14 | ||
| P/B | 22.84 | ||
| P/tB | N/A | ||
| EV/EBITDA | 20.72 |
EPS(TTM)21.16
EY1.64%
EPS(NY)31.56
Fwd EY2.45%
FCF(TTM)17.5
FCFY1.36%
OCF(TTM)18.65
OCFY1.45%
SpS94.4
BVpS56.46
TBVpS-18.83
PEG (NY)1.96
PEG (5Y)1.65
Profitability
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| ROA | 17.8% | ||
| ROE | 38.58% | ||
| ROCE | 26.27% | ||
| ROIC | 22.93% | ||
| ROICexc | 28.58% | ||
| ROICexgc | 496.42% | ||
| OM | 27.71% | ||
| PM (TTM) | 23.07% | ||
| GM | 46.92% | ||
| FCFM | 18.53% |
ROA(3y)12.2%
ROA(5y)11.02%
ROE(3y)27.7%
ROE(5y)28.07%
ROIC(3y)16.17%
ROIC(5y)15.85%
ROICexc(3y)20.02%
ROICexc(5y)19.87%
ROICexgc(3y)637.19%
ROICexgc(5y)N/A
ROCE(3y)18.53%
ROCE(5y)18.16%
ROICexcg growth 3YN/A
ROICexcg growth 5YN/A
ROICexc growth 3Y14.95%
ROICexc growth 5Y21.57%
OM growth 3Y8.59%
OM growth 5Y15.63%
PM growth 3Y9.04%
PM growth 5Y19.25%
GM growth 3Y3.42%
GM growth 5Y3.77%
F-Score8
Asset Turnover0.77
Health
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Debt/Equity | 0.58 | ||
| Debt/FCF | 2.02 | ||
| Debt/EBITDA | 0.52 | ||
| Cap/Depr | 3.12% | ||
| Cap/Sales | 1.22% | ||
| Interest Coverage | 250 | ||
| Cash Conversion | 29.5% | ||
| Profit Quality | 80.32% | ||
| Current Ratio | 1.2 | ||
| Quick Ratio | 1.2 | ||
| Altman-Z | 14.25 |
F-Score8
WACC8.85%
ROIC/WACC2.59
Cap/Depr(3y)2.68%
Cap/Depr(5y)3.36%
Cap/Sales(3y)1.15%
Cap/Sales(5y)1.44%
Profit Quality(3y)81.18%
Profit Quality(5y)N/A
High Growth Momentum
Growth
EPS 1Y (TTM)46.84%
EPS 3Y20.83%
EPS 5Y36.86%
EPS Q2Q%25.19%
EPS Next Y31.14%
EPS Next 2Y26.15%
EPS Next 3Y24.35%
EPS Next 5Y20.15%
Revenue 1Y (TTM)15%
Revenue growth 3Y9.51%
Revenue growth 5Y14.11%
Sales Q2Q%12.51%
Revenue Next Year14.37%
Revenue Next 2Y13.28%
Revenue Next 3Y12.53%
Revenue Next 5Y11.09%
EBIT growth 1Y41.41%
EBIT growth 3Y18.92%
EBIT growth 5Y31.95%
EBIT Next Year33.47%
EBIT Next 3Y22.92%
EBIT Next 5Y19.31%
FCF growth 1Y153.82%
FCF growth 3YN/A
FCF growth 5YN/A
OCF growth 1Y141.85%
OCF growth 3Y165.66%
OCF growth 5YN/A