Overall NFLX gets a fundamental rating of 7 out of 10. We evaluated NFLX against 80 industry peers in the Entertainment industry. Both the health and profitability get an excellent rating, making NFLX a very profitable company, without any liquidiy or solvency issues. NFLX is not overvalued while it is showing excellent growth. This is an interesting combination. With these ratings, NFLX could be worth investigating further 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.
NFLX had a positive operating cash flow in the past year.
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

Looking at the Return On Assets, with a value of 19.75%, NFLX belongs to the top of the industry, outperforming 93.75% of the companies in the same industry.
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.
NFLX has a better Return On Invested Capital (25.95%) 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

Looking at the Profit Margin, with a value of 24.30%, NFLX belongs to the top of the industry, outperforming 95.00% of the companies in the same industry.
NFLX's Profit Margin has improved in the last couple of years.
With an excellent Operating Margin value of 29.49%, NFLX belongs to the best of the industry, outperforming 97.50% of the companies in the same industry.
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%

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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
Compared to 5 years ago, NFLX has more shares outstanding
NFLX has a better debt/assets ratio than last year.

2.2 Solvency

NFLX has an Altman-Z score of 10.06. This indicates that NFLX is financially healthy and has little risk of bankruptcy at the moment.
With an excellent Altman-Z score value of 10.06, NFLX belongs to the best 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 better Debt to FCF ratio (1.53) than 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 of 0.51. This is comparable to the rest of the industry: NFLX outperforms 48.75% 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	0.51
Debt/FCF	1.53
Altman-Z	10.06

ROIC/WACC2.66

WACC9.74%

2.3 Liquidity

A Current Ratio of 1.19 indicates that NFLX should not have too much problems paying its short term obligations.
NFLX's Current ratio of 1.19 is in line compared 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.
NFLX's Quick ratio of 1.19 is in line compared to the rest of the industry. NFLX outperforms 56.25% of its industry peers.
NFLX does not score too well on the current and quick ratio evaluation. However, as it has 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.
NFLX shows a strong growth in Earnings Per Share. Measured over the last years, the EPS has been growing by 32.92% yearly.
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

The Earnings Per Share is expected to grow by 20.08% on average over the next years. This is a very strong growth
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

NFLX is valuated quite expensively with a Price/Earnings ratio of 32.71.
Based on the Price/Earnings ratio, NFLX is valued a bit cheaper than the industry average as 77.50% of the companies are valued more expensively.
When comparing the Price/Earnings ratio of NFLX to the average of the S&P500 Index (28.41), we can say NFLX is valued inline with the index average.
NFLX is valuated quite expensively with a Price/Forward Earnings ratio of 25.06.
Compared to the rest of the industry, the Price/Forward Earnings ratio of NFLX indicates a somewhat cheap valuation: NFLX is cheaper than 77.50% of the companies listed in the same industry.
The average S&P500 Price/Forward Earnings ratio is at 25.64. NFLX is around the same levels.

		Industry Rank	Sector Rank
PE	32.71
Fwd PE	25.06

4.2 Price Multiples

Compared to the rest of the industry, the Enterprise Value to EBITDA ratio of NFLX indicates a somewhat cheap valuation: NFLX is cheaper than 73.75% of the companies listed 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	37.17
EV/EBITDA	11.97

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.