Markets

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

Netflix (NFLX) closed the most recent trading day at $357.16, moving +1.87% from the previous trading session. This move outpaced the S&P 500's daily gain of 0.97%. Meanwhile, the Dow gained 1.35%, and the Nasdaq, a tech-heavy index, added 1.39%.

Prior to today's trading, shares of the internet video service had gained 0.72% over the past month. This has outpaced the Consumer Discretionary sector's gain of 0.28% and the S&P 500's gain of 0.64% in that time.

NFLX will be looking to display strength as it nears its next earnings release, which is expected to be July 17, 2019. The company is expected to report EPS of $0.56, down 34.12% from the prior-year quarter. Our most recent consensus estimate is calling for quarterly revenue of $4.93 billion, up 26.11% from the year-ago period.

Looking at the full year, our Zacks Consensus Estimates suggest analysts are expecting earnings of $3.34 per share and revenue of $20.18 billion. These totals would mark changes of +24.63% and +27.78%, respectively, from last year.

It is also important to note the recent changes to analyst estimates for NFLX. These revisions typically reflect the latest short-term business trends, which can change frequently. As a result, we can interpret positive estimate revisions as a good sign for the company's business outlook.

Research indicates that these estimate revisions are directly correlated with near-term share price momentum. To benefit from this, we have developed the Zacks Rank, a proprietary model which takes these estimate changes into account and provides an 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. The Zacks Consensus EPS estimate has moved 0.33% 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 104.85 right now. For comparison, its industry has an average Forward P/E of 14.78, which means NFLX is trading at a premium to the group.

It is also worth noting that NFLX currently has a PEG ratio of 3.49. 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. NFLX's industry had an average PEG ratio of 1.17 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.

Be sure to follow all of these stock-moving metrics, and many more, on Zacks.com.


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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.