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 overvalued while it is showing excellent growth. This is an interesting combination. This makes NFLX very considerable for growth and quality investing!
1. Profitability
1.1 Basic Checks
In the past year NFLX was profitable.
NFLX had a positive operating cash flow in the past year.
Each year in the past 5 years NFLX has been profitable.
In the past 5 years NFLX always reported a positive cash flow from operatings.
1.2 Ratios
Looking at the Return On Assets, with a value of 16.24%, NFLX belongs to the top of the industry, outperforming 97.22% of the companies in the same industry.
NFLX has a Return On Equity of 35.21%. This is amongst the best in the industry. NFLX outperforms 93.06% of its industry peers.
With an excellent Return On Invested Capital value of 21.21%, NFLX belongs to the best of the industry, outperforming 97.22% of the companies in the same industry.
NFLX had an Average Return On Invested Capital over the past 3 years of 16.17%. This is significantly below the industry average of 82.14%.
The last Return On Invested Capital (21.21%) for NFLX is above the 3 year average (16.17%), which is a sign of increasing profitability.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| ROA | 16.24% | ||
| ROE | 35.21% | ||
| ROIC | 21.21% |
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
NFLX's Profit Margin of 22.34% is amongst the best of the industry. NFLX outperforms 94.44% of its industry peers.
NFLX's Profit Margin has improved in the last couple of years.
With an excellent Operating Margin value of 26.71%, NFLX belongs to the best of the industry, outperforming 97.22% of the companies in the same industry.
NFLX's Operating Margin has improved in the last couple of years.
The Gross Margin of NFLX (46.06%) 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 | 26.71% | ||
| PM (TTM) | 22.34% | ||
| GM | 46.06% |
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.
The number of shares outstanding for NFLX has been reduced compared to 1 year ago.
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 10.88 indicates that NFLX is not in any danger for bankruptcy at the moment.
NFLX's Altman-Z score of 10.88 is amongst the best of the industry. NFLX outperforms 97.22% of its industry peers.
The Debt to FCF ratio of NFLX is 2.25, which is a good value as it means it would take NFLX, 2.25 years of fcf income to pay off all of its debts.
NFLX has a better Debt to FCF ratio (2.25) than 80.56% of its industry peers.
A Debt/Equity ratio of 0.56 indicates that NFLX is somewhat dependend on debt financing.
Looking at the Debt to Equity ratio, with a value of 0.56, NFLX is in line with its industry, outperforming 51.39% 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 | 0.56 | ||
| Debt/FCF | 2.25 | ||
| Altman-Z | 10.88 |
ROIC/WACC2.41
WACC8.8%
2.3 Liquidity
NFLX has a Current Ratio of 1.22. This is a normal value and indicates that NFLX is financially healthy and should not expect problems in meeting its short term obligations.
With a decent Current ratio value of 1.22, NFLX is doing good in the industry, outperforming 65.28% of the companies in the same industry.
NFLX has a Quick Ratio of 1.22. 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 1.22. This is in the better half of the industry: NFLX outperforms 65.28% of its industry peers.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Current Ratio | 1.22 | ||
| Quick Ratio | 1.22 |
3. Growth
3.1 Past
NFLX shows a strong growth in Earnings Per Share. In the last year, the EPS has been growing by 46.84%, which is quite impressive.
NFLX shows a strong growth in Earnings Per Share. Measured over the last years, the EPS has been growing by 36.86% yearly.
Looking at the last year, NFLX shows a quite strong growth in Revenue. The Revenue has grown by 15.65% in the last year.
NFLX shows quite a strong growth in Revenue. Measured over the last years, the Revenue has been growing by 14.11% yearly.
EPS 1Y (TTM)46.84%
EPS 3Y20.83%
EPS 5Y36.86%
EPS Q2Q%25.19%
Revenue 1Y (TTM)15.65%
Revenue growth 3Y9.51%
Revenue growth 5Y14.11%
Sales Q2Q%12.51%
3.2 Future
NFLX is expected to show quite a strong growth in Earnings Per Share. In the coming years, the EPS will grow by 19.27% yearly.
NFLX is expected to show quite a strong growth in Revenue. In the coming years, the Revenue will grow by 11.16% yearly.
EPS Next Y27.35%
EPS Next 2Y24.88%
EPS Next 3Y22.98%
EPS Next 5Y19.27%
Revenue Next Year13.98%
Revenue Next 2Y12.88%
Revenue Next 3Y12.25%
Revenue Next 5Y11.16%
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
The Price/Earnings ratio is 45.98, which means the current valuation is very expensive for NFLX.
Based on the Price/Earnings ratio, NFLX is valued a bit cheaper than 73.61% of the companies in the same industry.
When comparing the Price/Earnings ratio of NFLX to the average of the S&P500 Index (28.29), we can say NFLX is valued expensively.
NFLX is valuated quite expensively with a Price/Forward Earnings ratio of 31.46.
Compared to the rest of the industry, the Price/Forward Earnings ratio of NFLX indicates a somewhat cheap valuation: NFLX is cheaper than 73.61% of the companies listed in the same industry.
NFLX is valuated rather expensively when we compare the Price/Forward Earnings ratio to 21.08, which is the current average of the S&P500 Index.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| PE | 45.98 | ||
| Fwd PE | 31.46 |
4.2 Price Multiples
Based on the Enterprise Value to EBITDA ratio, NFLX is valued a bit cheaper than 68.06% of the companies in the same industry.
62.50% 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 | 60.13 | ||
| EV/EBITDA | 16.14 |
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 22.98% in the coming years. This may justify a more expensive valuation.
PEG (NY)1.68
PEG (5Y)1.25
EPS Next 2Y24.88%
EPS Next 3Y22.98%
5. Dividend
5.1 Amount
NFLX does not give a dividend.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Dividend Yield | N/A |
973.03
+11.4 (+1.19%)
Chartmill FA Rating
GICS SectorCommunication Services
GICS IndustryGroupMedia & Entertainment
GICS IndustryEntertainment
Earnings (Last)
Earnings (Next)
Inst Owners86.17%
Inst Owner Change0%
Ins Owners0.03%
Ins Owner Change3.16%
Market Cap416.22B
Analysts80.74
Price Target1102.69 (13.33%)
Short Float %1.74%
Short Ratio1.65
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)1.61%
Min EPS beat(2)-0.27%
Max EPS beat(2)3.48%
EPS beat(4)3
Avg EPS beat(4)4.64%
Min EPS beat(4)-0.27%
Max EPS beat(4)14.46%
EPS beat(8)5
Avg EPS beat(8)3.52%
EPS beat(12)8
Avg EPS beat(12)1.96%
EPS beat(16)11
Avg EPS beat(16)7.53%
Revenue beat(2)0
Avg Revenue beat(2)-1.04%
Min Revenue beat(2)-1.41%
Max Revenue beat(2)-0.66%
Revenue beat(4)0
Avg Revenue beat(4)-1.17%
Min Revenue beat(4)-1.64%
Max Revenue beat(4)-0.66%
Revenue beat(8)0
Avg Revenue beat(8)-1.58%
Revenue beat(12)0
Avg Revenue beat(12)-1.74%
Revenue beat(16)0
Avg Revenue beat(16)-1.75%
PT rev (1m)0.9%
PT rev (3m)29.66%
EPS NQ rev (1m)0.16%
EPS NQ rev (3m)-5.52%
EPS NY rev (1m)0%
EPS NY rev (3m)4%
Revenue NQ rev (1m)0.1%
Revenue NQ rev (3m)-0.72%
Revenue NY rev (1m)0.04%
Revenue NY rev (3m)1.3%
Valuation
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| PE | 45.98 | ||
| Fwd PE | 31.46 | ||
| P/S | 10.67 | ||
| P/FCF | 60.13 | ||
| P/OCF | 56.54 | ||
| P/B | 16.82 | ||
| P/tB | N/A | ||
| EV/EBITDA | 16.14 |
EPS(TTM)21.16
EY2.17%
EPS(NY)30.93
Fwd EY3.18%
FCF(TTM)16.18
FCFY1.66%
OCF(TTM)17.21
OCFY1.77%
SpS91.17
BVpS57.84
TBVpS-18.02
PEG (NY)1.68
PEG (5Y)1.25
Profitability
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| ROA | 16.24% | ||
| ROE | 35.21% | ||
| ROCE | 24.3% | ||
| ROIC | 21.21% | ||
| ROICexc | 27.31% | ||
| ROICexgc | 1084.06% | ||
| OM | 26.71% | ||
| PM (TTM) | 22.34% | ||
| GM | 46.06% | ||
| FCFM | 17.75% |
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 Turnover0.73
Health
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Debt/Equity | 0.56 | ||
| Debt/FCF | 2.25 | ||
| Debt/EBITDA | 0.53 | ||
| Cap/Depr | 2.81% | ||
| Cap/Sales | 1.13% | ||
| Interest Coverage | 15.44 | ||
| Cash Conversion | 28.26% | ||
| Profit Quality | 79.46% | ||
| Current Ratio | 1.22 | ||
| Quick Ratio | 1.22 | ||
| Altman-Z | 10.88 |
F-Score8
WACC8.8%
ROIC/WACC2.41
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 Y27.35%
EPS Next 2Y24.88%
EPS Next 3Y22.98%
EPS Next 5Y19.27%
Revenue 1Y (TTM)15.65%
Revenue growth 3Y9.51%
Revenue growth 5Y14.11%
Sales Q2Q%12.51%
Revenue Next Year13.98%
Revenue Next 2Y12.88%
Revenue Next 3Y12.25%
Revenue Next 5Y11.16%
EBIT growth 1Y49.81%
EBIT growth 3Y18.92%
EBIT growth 5Y31.95%
EBIT Next Year30.43%
EBIT Next 3Y21.76%
EBIT Next 5Y18.17%
FCF growth 1Y-0.06%
FCF growth 3YN/A
FCF growth 5YN/A
OCF growth 1Y1.2%
OCF growth 3Y165.66%
OCF growth 5YN/A