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

Zacks

Netflix (NFLX Free Report) closed at $349.10 in the latest trading session, marking a -0.54% move from the prior day. This move lagged the S&P 500’s daily loss of 0.04%. Meanwhile, the Dow gained 0.15%, and the Nasdaq, a tech-heavy index, lost 0.67%.

Heading into today, shares of the internet video service had gained 1.41% over the past month, outpacing the Consumer Discretionary sector’s loss of 0.12% and the S&P 500’s gain of 0.02% 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 16, 2018. The company is expected to report EPS of $0.68, up 134.48% from the prior-year quarter. Meanwhile, our latest consensus estimate is calling for revenue of $3.99 billion, up 33.65% from the prior-year quarter.

Looking at the full year, our Zacks Consensus Estimates suggest analysts are expecting earnings of $2.67 per share and revenue of $15.87 billion. These totals would mark changes of +113.6% and +35.72%, respectively, from last year.

It is also important to note the recent changes to analyst estimates for NFLX. These revisions help to show the ever-changing nature of near-term business trends. As a result, we can interpret positive estimate revisions as a good sign for the company’s business outlook.

Based on our research, we believe these estimate revisions are directly related to near-team stock moves. Investors can capitalize on this by using the Zacks Rank. This model considers these estimate changes and provides a simple, actionable rating system.

The Zacks Rank system, which ranges from #1 (Strong Buy) to #5 (Strong Sell), has an impressive outside-audited track record of outperformance, with #1 stocks generating an average annual return of +25% since 1988. Within the past 30 days, our consensus EPS projection remained stagnant. NFLX is holding a Zacks Rank of #3 (Hold) right now.

Investors should also note NFLX’s current valuation metrics, including its Forward P/E ratio of 131.62. For comparison, its industry has an average Forward P/E of 13.5, which means NFLX is trading at a premium to the group.

Meanwhile, NFLX’s PEG ratio is currently 4.39. This metric is used similarly to the famous P/E ratio, but the PEG ratio also takes into account the stock’s expected earnings growth rate. The Broadcast Radio and Television was holding an average PEG ratio of 0.94 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 72, which puts it in the top 28% 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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