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

Zacks Equity Research
Verisk (VRSK) reported earnings 30 days ago. What's next for the stock? We take a look at earnings estimates for some clues.

In the latest trading session, Netflix (NFLX) closed at $358.82, marking a -0.66% move from the previous day. This change lagged the S&P 500's daily loss of 0.09%. At the same time, the Dow added 0.03%, and the tech-heavy Nasdaq lost 0.16%.

Coming into today, shares of the internet video service had gained 2.68% in the past month. In that same time, the Consumer Discretionary sector gained 2.18%, while the S&P 500 gained 2.35%.

Wall Street will be looking for positivity from NFLX as it approaches its next earnings report date. On that day, NFLX is projected to report earnings of $0.58 per share, which would represent a year-over-year decline of 9.38%. Meanwhile, our latest consensus estimate is calling for revenue of $4.49 billion, up 21.29% from the prior-year quarter.

Looking at the full year, our Zacks Consensus Estimates suggest analysts are expecting earnings of $4.05 per share and revenue of $20.17 billion. These totals would mark changes of +51.12% and +27.69%, respectively, from last year.

Investors might also notice recent changes to analyst estimates for NFLX. Recent revisions tend to reflect the latest near-term business trends. With this in mind, we can consider positive estimate revisions a sign of optimism about 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.

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. The Zacks Consensus EPS estimate has moved 0.4% 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 89.29 right now. This represents a premium compared to its industry's average Forward P/E of 17.83.

It is also worth noting that NFLX currently has a PEG ratio of 2.98. 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 industry currently had an average PEG ratio of 1.22 as of yesterday's close.

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 includes is listed in order 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.

You can find more information on all of these metrics, and much more, on Zacks.com.


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