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

In the latest trading session, Netflix (NFLX) closed at $309.99, marking a -1.48% move from the previous day. This move lagged the S&P 500's daily loss of 0.86%. Elsewhere, the Dow lost 0.96%, while the tech-heavy Nasdaq lost 1.13%.

Heading into today, shares of the internet video service had gained 9.48% over the past month, outpacing the Consumer Discretionary sector's gain of 5.47% and the S&P 500's gain of 3.66% in that time.

Investors will be hoping for strength from NFLX as it approaches its next earnings release. The company is expected to report EPS of $0.52, up 73.33% from the prior-year quarter. Meanwhile, the Zacks Consensus Estimate for revenue is projecting net sales of $5.44 billion, up 29.92% from the year-ago period.

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.

Investors might also notice recent changes to analyst estimates for NFLX. Recent revisions tend to reflect the latest near-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. The Zacks Consensus EPS estimate has moved 0.01% higher within the past month. NFLX is currently a Zacks Rank #3 (Hold).

Valuation is also important, so investors should note that NFLX has a Forward P/E ratio of 94.01 right now. For comparison, its industry has an average Forward P/E of 13.07, which means NFLX is trading at a premium to the group.

It is also worth noting that NFLX currently has a PEG ratio of 3.13. 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 1.28 at yesterday's closing price.

The Broadcast Radio and Television industry is part of the Consumer Discretionary sector. This group has a Zacks Industry Rank of 100, putting it in the top 40% 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.

Be sure to follow all of these stock-moving metrics, and many more, on Zacks.com.

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