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

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Netflix (NFLX - Free Report) closed at $446.73 in the latest trading session, marking a -1.85% move from the prior day. This move lagged the S&P 500's daily loss of 0.39%. Meanwhile, the Dow lost 0.19%, and the Nasdaq, a tech-heavy index, lost 0.59%.

Prior to today's trading, shares of the internet video service had gained 4.73% over the past month. This has outpaced the Consumer Discretionary sector's gain of 3.9% and lagged the S&P 500's gain of 5.08% in that time.

The investment community will be paying close attention to the earnings performance of Netflix in its upcoming release. The company's earnings per share (EPS) are projected to be $2.18, reflecting a 1716.67% increase from the same quarter last year. At the same time, our most recent consensus estimate is projecting a revenue of $8.7 billion, reflecting a 10.86% rise from the equivalent quarter last year.

NFLX's full-year Zacks Consensus Estimates are calling for earnings of $12.07 per share and revenue of $33.6 billion. These results would represent year-over-year changes of +21.31% and +6.26%, respectively.

Investors should also pay attention to any latest changes in analyst estimates for Netflix. Recent revisions tend to reflect the latest near-term business trends. Consequently, upward revisions in estimates express analysts' positivity towards the company's business operations and its ability to generate profits.

Our research shows that these estimate changes are directly correlated with near-term stock prices. We developed the Zacks Rank to capitalize on this phenomenon. Our system takes these estimate changes into account and delivers a clear, actionable rating model.

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 0.02% higher. Right now, Netflix possesses a Zacks Rank of #3 (Hold).

With respect to valuation, Netflix is currently being traded at a Forward P/E ratio of 37.71. This valuation marks a premium compared to its industry's average Forward P/E of 13.07.

It is also worth noting that NFLX currently has a PEG ratio of 1.77. 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 industry had an average PEG ratio of 1.37 as trading concluded yesterday.

The Broadcast Radio and Television industry is part of the Consumer Discretionary sector. This industry, currently bearing a Zacks Industry Rank of 92, finds itself in the top 37% echelons of all 250+ industries.

The Zacks Industry Rank is ordered from best to worst in terms of the average Zacks Rank of the individual companies within each of these sectors. 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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