Netflix (NFLX) Stock: Weak On High Volume Today
Trade-Ideas LLC identified
(
) as a weak on high relative volume candidate. In addition to specific proprietary factors, Trade-Ideas identified Netflix as such a stock due to the following factors:
- NFLX has an average dollar-volume (as measured by average daily share volume multiplied by share price) of $953.4 million.
- NFLX has traded 3.6 million shares today.
- NFLX is trading at 2.61 times the normal volume for the stock at this time of day.
- NFLX is trading at a new low 3.01% below yesterday's close.
'Weak on High Relative Volume' stocks are worth watching because major volume moves tend to indicate underlying activity such as material stock news, analyst downgrades, insider selling, selling from 'superinvestors,' or that hedge funds and traders are piling out of a stock ahead of a catalyst. Regardless of the impetus behind the price and volume action, when a stock moves with strength and volume it can indicate the start of a new trend on which early investors can capitalize (or avoid losses by trimming weak positions). In the event of a well-timed trading opportunity, combining technical indicators with fundamental trends and a disciplined trading methodology should help you take the first steps towards investment success.
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More details on NFLX:
Netflix, Inc., an Internet television network, engages in the Internet delivery of television (TV) shows and movies on various Internet-connected screens. The Company operates in three segments: Domestic streaming, International streaming and Domestic DVD. NFLX has a PE ratio of 32. Currently there are 16 analysts that rate Netflix a buy, 3 analysts rate it a sell, and 8 rate it a hold.
The average volume for Netflix has been 14.7 million shares per day over the past 30 days. Netflix has a market cap of $39.8 billion and is part of the services sector and media industry. The stock has a beta of 0.97 and a short float of 8.3% with 3.45 days to cover. Shares are down 21.3% year-to-date as of the close of trading on Wednesday.
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Analysis:
rates Netflix as a
. The company's strengths can be seen in multiple areas, such as its robust revenue growth, expanding profit margins and solid stock price performance. However, as a counter to these strengths, we also find weaknesses including generally higher debt management risk, disappointing return on equity and premium valuation.
Highlights from the ratings report include:
- NFLX's revenue growth trails the industry average of 42.8%. Since the same quarter one year prior, revenues rose by 24.4%. This growth in revenue appears to have trickled down to the company's bottom line, improving the earnings per share.
- The gross profit margin for NETFLIX INC is currently very high, coming in at 85.91%. It has increased from the same quarter the previous year. Regardless of the strong results of the gross profit margin, the net profit margin of 1.41% trails the industry average.
- The stock has not only risen over the past year, it has done so at a faster pace than the S&P 500, reflecting the earnings growth and other positive factors similar to those we have cited here. Looking ahead, the stock's rise over the last year has already helped drive it to a level which is relatively expensive compared to the rest of its industry, implying reduced upside potential.
- Current return on equity is lower than its ROE from the same quarter one year prior. This is a clear sign of weakness within the company. When compared to other companies in the Internet & Catalog Retail industry and the overall market, NETFLIX INC's return on equity is below that of both the industry average and the S&P 500.
- You can view the full Netflix Ratings Report.
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