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Netflix (NFLX) Suffers a Larger Drop Than the General Market: Key Insights

The most recent trading session ended with Netflix (NFLX) standing at $596.48, reflecting a -0.86% shift from the previouse trading day's closing. This move lagged the S&P 500's daily loss of 0.17%. Elsewhere, the Dow lost 0.06%, while the tech-heavy Nasdaq lost 0.55%.

The internet video service's shares have seen an increase of 6.9% over the last month, surpassing the Consumer Discretionary sector's gain of 0.67% and the S&P 500's gain of 3.98%.

Investors will be eagerly watching for the performance of Netflix in its upcoming earnings disclosure. The company is predicted to post an EPS of $4.41, indicating a 53.13% growth compared to the equivalent quarter last year. Meanwhile, our latest consensus estimate is calling for revenue of $9.25 billion, up 13.35% from the prior-year quarter.

In terms of the entire fiscal year, the Zacks Consensus Estimates predict earnings of $16.93 per share and a revenue of $38.54 billion, indicating changes of +40.73% and +14.27%, respectively, from the former year.

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Additionally, investors should keep an eye on any recent revisions to analyst forecasts for Netflix. These revisions help to show the ever-changing nature of near-term business trends. Hence, positive alterations in estimates signify analyst optimism regarding the company's business and profitability.

Empirical research indicates that these revisions in estimates have a direct correlation with impending stock price performance. 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. Over the past month, the Zacks Consensus EPS estimate remained stagnant. Right now, Netflix possesses a Zacks Rank of #1 (Strong Buy).

Looking at valuation, Netflix is presently trading at a Forward P/E ratio of 35.54. This signifies a premium in comparison to the average Forward P/E of 8.56 for its industry.

It is also worth noting that NFLX currently has a PEG ratio of 1.64. 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 0.59 as of yesterday's close.

The Broadcast Radio and Television industry is part of the Consumer Discretionary sector. This industry, currently bearing a Zacks Industry Rank of 161, finds itself in the bottom 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 use Zacks.com to monitor all these stock-influencing metrics, and more, throughout the forthcoming trading sessions.

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Netflix, Inc. (NFLX) : Free Stock Analysis Report

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Zacks Investment Research