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

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  • NFLX

In the latest trading session, Netflix (NFLX) closed at $628.08, marking a +0.4% move from the previous day. The stock outpaced the S&P 500's daily gain of 0.31%. Elsewhere, the Dow gained 0.1%, while the tech-heavy Nasdaq added 0.48%.

Prior to today's trading, shares of the internet video service had lost 4.64% over the past month. This has was narrower than the Consumer Discretionary sector's loss of 6.83% and lagged the S&P 500's loss of 0.04% in that time.

Investors will be hoping for strength from Netflix as it approaches its next earnings release. On that day, Netflix is projected to report earnings of $0.82 per share, which would represent a year-over-year decline of 31.09%. Meanwhile, our latest consensus estimate is calling for revenue of $7.72 billion, up 16.21% from the prior-year quarter.

For the full year, our Zacks Consensus Estimates are projecting earnings of $10.74 per share and revenue of $29.71 billion, which would represent changes of +76.64% and +18.84%, respectively, from the prior year.

Investors should also note any recent changes to analyst estimates for Netflix. Recent revisions tend to reflect the latest near-term business trends. As such, positive estimate revisions reflect analyst optimism about the company's business and profitability.

Research indicates that these estimate revisions are directly correlated with near-term share price momentum. 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. Over the past month, the Zacks Consensus EPS estimate has moved 0.96% higher. Netflix is currently a Zacks Rank #3 (Hold).

In terms of valuation, Netflix is currently trading at a Forward P/E ratio of 58.22. For comparison, its industry has an average Forward P/E of 16.02, which means Netflix is trading at a premium to the group.

Investors should also note that NFLX has a PEG ratio of 1.9 right now. 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. Broadcast Radio and Television stocks are, on average, holding a PEG ratio of 1.49 based on yesterday's closing prices.

The Broadcast Radio and Television industry is part of the Consumer Discretionary sector. This group has a Zacks Industry Rank of 112, putting it in the top 45% 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.

Make sure to utilize Zacks.com to follow all of these stock-moving metrics, and more, in the coming trading sessions.


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