Netflix (NFLX) closed the most recent trading day at $322.13, moving -0.28% from the previous trading session. This move was narrower than the S&P 500’s daily loss of 0.3%. At the same time, the Dow lost 0.71%, and the tech-heavy Nasdaq gained 0.84%.
Prior to today’s trading, shares of the internet video service had lost 8.52% over the past month. This has lagged the Consumer Discretionary sector’s loss of 4.7% and the S&P 500’s loss of 2% in that time.
Netflix will be looking to display strength as it nears its next earnings release. The company is expected to report EPS of $2.81, down 20.4% from the prior-year quarter. Meanwhile, the Zacks Consensus Estimate for revenue is projecting net sales of $8.18 billion, up 3.92% from the year-ago period.
NFLX’s full-year Zacks Consensus Estimates are calling for earnings of $11.18 per share and revenue of $34.15 billion. These results would represent year-over-year changes of +12.36% and +8.02%, respectively.
Investors might also notice recent changes to analyst estimates for Netflix. 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. 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, 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. Within the past 30 days, our consensus EPS projection has moved 0.45% higher. Netflix currently has a Zacks Rank of #2 (Buy).
Digging into valuation, Netflix currently has a Forward P/E ratio of 28.9. For comparison, its industry has an average Forward P/E of 15.35, which means Netflix is trading at a premium to the group.
Also, we should mention that NFLX has a PEG ratio of 1.5. The PEG ratio is similar to the widely-used P/E ratio, but this metric also takes the company’s expected earnings growth rate into account. The Broadcast Radio and Television was holding an average PEG ratio of 1.52 at yesterday’s closing price.
The Broadcast Radio and Television industry is part of the Consumer Discretionary sector. This group has a Zacks Industry Rank of 214, putting it in the bottom 16% of all 250+ industries.
The Zacks Industry Rank gauges the strength of our individual industry groups by measuring the average Zacks Rank of the individual stocks within the groups. 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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