Netflix, Inc. Fundamental Analysis (NASDAQ: NFLX)
Netflix, Inc. (NASDAQ: NFLX) shows strong financial fundamentals with a PE ratio of 19.05, profit margin of 29.69%, and ROE of 50.41%. The company generates $50.1B in annual revenue with strong year-over-year growth of 15.85%.
Key Strengths
Areas of Concern
The stock receives a Fundamental Health Score of 75.2/100 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
ExcellentNFLX trades at attractive valuation levels.
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 19.05 times earnings. This indicates a fair valuation.
PEG Ratio
When adjusting for growth, NFLX's PEG of 0.44 indicates potential undervaluation.
Price to Book
The market values Netflix, Inc. at 9.46 times its book value. This suggests the stock is fully valued or overvalued on an asset basis.
EV/EBITDA
Enterprise value stands at 7.46 times EBITDA. This is generally considered low.
How Well Does NFLX Make Money?
Net Profit Margin
For every $100 in sales, Netflix, Inc. keeps $29.69 as profit after all expenses.
Operating Margin
Core operations generate 31.30 in profit for every $100 in revenue, before interest and taxes.
ROE
Management delivers $50.41 in profit for every $100 of shareholder equity.
ROA
Netflix, Inc. generates $25.16 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 $12.40B, showing steady but balanced cash generation.
Free Cash Flow
Netflix, Inc. generates strong free cash flow of $11.46B, providing ample flexibility for dividends, buybacks, or growth.
FCF Per Share
Each share generates $2.75 in free cash annually.
FCF Yield
NFLX converts 4.10% of its market value into free cash.
Financial Ratios Analysis
Valuation Ratios
P/E Ratio
Price to earnings ratio
19.05
vs 25 benchmark
PEG Ratio
Price/earnings to growth ratio
0.44
vs 25 benchmark
P/B Ratio
Price to book value ratio
9.46
vs 25 benchmark
P/S Ratio
Price to sales ratio
5.61
vs 25 benchmark
Financial Health
Debt/Equity
Total debt to shareholders' equity
0.52
vs 25 benchmark
Current Ratio
Current assets to current liabilities
1.07
vs 25 benchmark
Efficiency Ratios
ROE
Return on equity percentage
0.50
vs 25 benchmark
ROA
Return on assets percentage
0.25
vs 25 benchmark
ROCE
Return on capital employed
0.34
vs 25 benchmark
How NFLX Stacks Against Its Sector Peers
| Metric | NFLX Value | Sector Average | Performance |
|---|---|---|---|
| P/E Ratio | 19.05 | 18.57 | Neutral |
| ROE | 50.41% | 872.00% | Weak |
| Net Margin | 29.69% | 1006.00% | Weak |
| Debt/Equity | 0.52 | -0.44 (disorted) | Distorted |
| Current Ratio | 1.07 | 1.86 | Neutral |
| ROA | 25.16% | 252.00% | Weak |
NFLX outperforms its industry in 0 out of 6 key metrics, but lagging in ROE.
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
88.45%
Industry Style: Growth, Technology, Streaming
High GrowthEPS CAGR
314.59%
Industry Style: Growth, Technology, Streaming
High GrowthFCF CAGR
335.97%
Industry Style: Growth, Technology, Streaming
High Growth