Netflix, Inc.
Netflix, Inc. Fundamental Analysis
Netflix, Inc. (NFLX) shows strong financial fundamentals with a PE ratio of 30.28, profit margin of 24.30%, and ROE of 43.25%. The company generates $45.3B in annual revenue with strong year-over-year growth of 15.65%.
Key Strengths
Areas of Concern
The stock receives a Fundamental Health Score of 74.5/100 based on profitability, valuation, growth, and balance sheet metrics. The B grade reflects solid fundamentals with room for improvement in valuation or growth.
Fundamental Health Score
We analyze NFLX's fundamental strength across five key dimensions:
Efficiency Score
ExcellentNFLX demonstrates superior asset utilization.
Valuation Score
WeakNFLX trades at a premium to fair value.
Growth Score
ExcellentNFLX delivers strong and consistent growth momentum.
Financial Health Score
ExcellentNFLX maintains a strong and stable balance sheet.
Profitability Score
ExcellentNFLX achieves industry-leading margins.
Key Financial Metrics
Is NFLX Expensive or Cheap?
P/E Ratio
NFLX trades at 30.28 times earnings. This suggests a premium valuation.
PEG Ratio
When adjusting for growth, NFLX's PEG of 5.73 indicates potential overvaluation.
Price to Book
The market values Netflix, Inc. at 12.50 times its book value. This suggests the stock is fully valued or overvalued on an asset basis.
EV/EBITDA
Enterprise value stands at 10.83 times EBITDA. This signals the market has high growth expectations.
How Well Does NFLX Make Money?
Net Profit Margin
For every $100 in sales, Netflix, Inc. keeps $24.30 as profit after all expenses.
Operating Margin
Core operations generate 29.49 in profit for every $100 in revenue, before interest and taxes.
ROE
Management delivers $43.25 in profit for every $100 of shareholder equity.
ROA
Netflix, Inc. generates $19.75 in profit for every $100 in assets, demonstrating efficient asset deployment.
Following the Money - Real Cash Generation
Operating Cash Flow
Netflix, Inc. produces operating cash flow of $10.17B, showing steady but balanced cash generation.
Free Cash Flow
Netflix, Inc. generates strong free cash flow of $9.48B, providing ample flexibility for dividends, buybacks, or growth.
FCF Per Share
Each share generates $2.24 in free cash annually.
FCF Yield
NFLX converts 2.84% of its market value into free cash.
Financial Ratios Analysis
Valuation Ratios
P/E Ratio
Price to earnings ratio
30.28
vs 25 benchmark
PEG Ratio
Price/earnings to growth ratio
5.73
vs 25 benchmark
P/B Ratio
Price to book value ratio
12.50
vs 25 benchmark
P/S Ratio
Price to sales ratio
7.37
vs 25 benchmark
Financial Health
Debt/Equity
Total debt to shareholders' equity
0.54
vs 25 benchmark
Current Ratio
Current assets to current liabilities
1.19
vs 25 benchmark
Efficiency Ratios
ROE
Return on equity percentage
0.43
vs 25 benchmark
ROA
Return on assets percentage
0.20
vs 25 benchmark
ROCE
Return on capital employed
0.30
vs 25 benchmark
How NFLX Stacks Against Its Sector Peers
| Metric | NFLX Value | Sector Average | Performance |
|---|---|---|---|
| P/E Ratio | 30.28 | 21.66 | Worse (Expensive) |
| ROE | 43.25% | 1190.00% | Weak |
| Net Margin | 24.30% | -55754.00% (disorted) | Strong |
| Debt/Equity | 0.54 | 1.32 | Strong (Low Leverage) |
| Current Ratio | 1.19 | 1.59 | Neutral |
| ROA | 19.75% | -202359.00% (disorted) | Strong |
NFLX outperforms its industry in 3 out of 6 key metrics, particularly excelling in Net Margin, but lagging in P/E Ratio.
Historical Growth Performance
5-Year Growth Trajectory
This section reviews Netflix, Inc.'s 5-year compound annual growth rate (CAGR) and compares its performance against the typical investment style of its industry.
Revenue CAGR
97.22%
Industry Style: Growth, Technology, Streaming
High GrowthEPS CAGR
375.63%
Industry Style: Growth, Technology, Streaming
High GrowthFCF CAGR
359.87%
Industry Style: Growth, Technology, Streaming
High Growth