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Netflix (NFLX) Outpaces Stock Market Gains: What You Should Know

Zacks Equity Research
·3-min read

In the latest trading session, Netflix (NFLX) closed at $473.08, marking a +0.52% move from the previous day. The stock outpaced the S&P 500's daily gain of 0.3%. Meanwhile, the Dow gained 0.2%, and the Nasdaq, a tech-heavy index, added 0.37%.

Heading into today, shares of the internet video service had lost 14.05% over the past month, lagging the Consumer Discretionary sector's gain of 0.22% and the S&P 500's loss of 5.02% in that time.

Wall Street will be looking for positivity from NFLX as it approaches its next earnings report date. This is expected to be October 20, 2020. On that day, NFLX is projected to report earnings of $2.11 per share, which would represent year-over-year growth of 43.54%. Our most recent consensus estimate is calling for quarterly revenue of $6.37 billion, up 21.43% from the year-ago period.

Looking at the full year, our Zacks Consensus Estimates suggest analysts are expecting earnings of $6.30 per share and revenue of $24.83 billion. These totals would mark changes of +52.54% and +23.18%, respectively, from last year.

Any recent changes to analyst estimates for NFLX should also be noted by investors. 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.

Research indicates that these estimate revisions are directly correlated with near-term share price momentum. To benefit from this, we have developed the Zacks Rank, a proprietary model which takes these estimate changes into account and provides an actionable rating system.

The Zacks Rank system ranges from #1 (Strong Buy) to #5 (Strong Sell). It has a remarkable, outside-audited track record of success, with #1 stocks delivering an average annual return of +25% since 1988. Over the past month, the Zacks Consensus EPS estimate has moved 0.22% higher. NFLX currently has a Zacks Rank of #4 (Sell).

Digging into valuation, NFLX currently has a Forward P/E ratio of 74.72. This valuation marks a premium compared to its industry's average Forward P/E of 9.05.

Also, we should mention that NFLX has a PEG ratio of 2.49. This popular metric is similar to the widely-known P/E ratio, with the difference being that the PEG ratio also takes into account the company's expected earnings growth rate. The Broadcast Radio and Television was holding an average PEG ratio of 0.63 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 96, putting it in the top 38% of all 250+ industries.

The Zacks Industry Rank gauges the strength of our 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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Netflix, Inc. (NFLX) : Free Stock Analysis Report
 
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Zacks Investment Research