Netflix (NFLX) Dips More Than Broader Markets: What You Should Know

In the latest trading session, Netflix (NFLX) closed at $302.50, marking a -1.58% move from the previous day. This move lagged the S&P 500's daily loss of 0.32%. Meanwhile, the Dow lost 0.38%, and the Nasdaq, a tech-heavy index, lost 0.4%.

Coming into today, shares of the internet video service had gained 6.14% in the past month. In that same time, the Consumer Discretionary sector gained 5.47%, while the S&P 500 gained 2.51%.

Investors will be hoping for strength from NFLX as it approaches its next earnings release. On that day, NFLX is projected to report earnings of $0.52 per share, which would represent year-over-year growth of 73.33%. Meanwhile, our latest consensus estimate is calling for revenue of $5.44 billion, up 29.92% from the prior-year quarter.

For the full year, our Zacks Consensus Estimates are projecting earnings of $3.35 per share and revenue of $20.13 billion, which would represent changes of +25% and +27.44%, respectively, from the prior year.

It is also important to note the recent changes to analyst estimates for NFLX. These recent revisions tend to reflect the evolving nature of short-term business trends. As a result, we can interpret positive estimate revisions as a good sign for the company's business outlook.

Our research shows that these estimate changes are directly correlated with near-term stock prices. Investors can capitalize on this by using the Zacks Rank. This model considers these estimate changes and provides a simple, actionable rating system.

Ranging from #1 (Strong Buy) to #5 (Strong Sell), the Zacks Rank system has a proven, outside-audited track record of outperformance, with #1 stocks returning an average of +25% annually since 1988. Within the past 30 days, our consensus EPS projection has moved 0.01% higher. NFLX is currently sporting a Zacks Rank of #3 (Hold).

Valuation is also important, so investors should note that NFLX has a Forward P/E ratio of 91.83 right now. This valuation marks a premium compared to its industry's average Forward P/E of 12.63.

Meanwhile, NFLX's PEG ratio is currently 3.06. The PEG ratio is similar to the widely-used P/E ratio, but this metric also takes the company's expected earnings growth rate into account. The Broadcast Radio and Television was holding an average PEG ratio of 1.57 at yesterday's closing price.

The Broadcast Radio and Television industry is part of the Consumer Discretionary sector. This industry currently has a Zacks Industry Rank of 99, which puts it in the top 39% of all 250+ industries.

The Zacks Industry Rank gauges the strength of our individual industry groups by measuring the average Zacks Rank of the individual stocks within the groups. Our research shows that the top 50% rated industries outperform the bottom half by a factor of 2 to 1.

You can find more information on all of these metrics, and much more, on Zacks.com.

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