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

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Netflix (NFLX) closed at $616.47 in the latest trading session, marking a -0.21% move from the prior day. This move lagged the S&P 500's daily gain of 1.42%. Meanwhile, the Dow gained 1.82%, and the Nasdaq, a tech-heavy index, added 0.61%.

Prior to today's trading, shares of the internet video service had lost 10.25% over the past month. This has lagged the Consumer Discretionary sector's loss of 9.86% and the S&P 500's loss of 2.09% 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 $0.89, down 25.21% from the prior-year quarter. Our most recent consensus estimate is calling for quarterly revenue of $7.73 billion, up 16.26% from the year-ago period.

NFLX's full-year Zacks Consensus Estimates are calling for earnings of $10.78 per share and revenue of $29.69 billion. These results would represent year-over-year changes of +77.3% and +18.79%, respectively.

It is also important to note the 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. We developed the Zacks Rank to capitalize on this phenomenon. Our system takes these estimate changes into account and delivers a clear, actionable rating model.

Ranging from #1 (Strong Buy) to #5 (Strong Sell), the Zacks Rank system has a proven, outside-audited track record of outperformance, with #1 stocks returning an average of +25% annually since 1988. Over the past month, the Zacks Consensus EPS estimate has moved 1.84% higher. Netflix currently has a Zacks Rank of #3 (Hold).

Digging into valuation, Netflix currently has a Forward P/E ratio of 57.33. For comparison, its industry has an average Forward P/E of 15.46, which means Netflix is trading at a premium to the group.

It is also worth noting that NFLX currently has a PEG ratio of 1.87. 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 1.51 as of yesterday's close.

The Broadcast Radio and Television industry is part of the Consumer Discretionary sector. This industry currently has a Zacks Industry Rank of 108, which puts it in the top 43% 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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