Netflix (NFLX) Beats Stock Market Upswing: What Investors Need to Know

Netflix (NFLX) closed at $644.50 in the latest trading session, marking a +0.47% move from the prior day. Read More...

Netflix (NFLX) closed at $644.50 in the latest trading session, marking a +0.47% move from the prior day. The stock’s performance was ahead of the S&P 500’s daily gain of 0.26%. Meanwhile, the Dow experienced a rise of 0.18%, and the technology-dominated Nasdaq saw an increase of 0.35%.

Coming into today, shares of the internet video service had gained 5.01% in the past month. In that same time, the Consumer Discretionary sector gained 0.59%, while the S&P 500 gained 3.25%.

The investment community will be paying close attention to the earnings performance of Netflix in its upcoming release. The company’s upcoming EPS is projected at $4.70, signifying a 42.86% increase compared to the same quarter of the previous year. Meanwhile, our latest consensus estimate is calling for revenue of $9.53 billion, up 16.36% from the prior-year quarter.

In terms of the entire fiscal year, the Zacks Consensus Estimates predict earnings of $18.31 per share and a revenue of $38.7 billion, indicating changes of +52.2% and +14.75%, respectively, from the former year.

It is also important to note the recent changes to analyst estimates for Netflix. These latest adjustments often mirror the shifting dynamics of short-term business patterns. Consequently, upward revisions in estimates express analysts’ positivity towards the company’s business operations and its ability to generate profits.

Our research shows that these estimate changes are directly correlated with near-term stock prices. To utilize this, we have created the Zacks Rank, a proprietary model that integrates these estimate changes and provides a functional rating system.

The Zacks Rank system, running from #1 (Strong Buy) to #5 (Strong Sell), holds an admirable track record of superior performance, independently audited, with #1 stocks contributing an average annual return of +25% since 1988. Within the past 30 days, our consensus EPS projection has moved 0.08% higher. At present, Netflix boasts a Zacks Rank of #1 (Strong Buy).

With respect to valuation, Netflix is currently being traded at a Forward P/E ratio of 35.03. This expresses a premium compared to the average Forward P/E of 8.08 of its industry.

Meanwhile, NFLX’s PEG ratio is currently 1.39. This popular metric is similar to the widely-known P/E ratio, with the difference being that the PEG ratio also takes into account the company’s expected earnings growth rate. The Broadcast Radio and Television industry currently had an average PEG ratio of 0.84 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 79, putting it in the top 32% 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.

Don’t forget to use Zacks.com to keep track of all these stock-moving metrics, and others, in the upcoming trading sessions.

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