Netflix Inc

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NFLX : NASDAQ : Services
$151.84 -5.7 | -3.6%
Today's Range: 151.15 - 156.9775
Avg. Daily Volume: 6229800.0
06/27/17 - 2:57 PM ET

Financial Analysis


NETFLIX INC's gross profit margin for the first quarter of its fiscal year 2017 is essentially unchanged when compared to the same period a year ago. The company has grown sales and net income significantly, outpacing the average growth rates of competitors within its industry. NETFLIX INC has very weak liquidity. Currently, the Quick Ratio is 0.27 which clearly shows a lack of ability to cover short-term cash needs. The liquidity decreased from the same period a year ago, despite already having weak liquidity to begin with. This would indicate deteriorating cash flow.

At the same time, stockholders' equity ("net worth") has greatly increased by 28.32% from the same quarter last year. The key liquidity measurements indicate that the company is in a position in which financial difficulties could develop in the near future.

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Income Statement Q1 FY17 Q1 FY16
Net Sales ($mil)2636.641957.74
EBITDA ($mil)1596.271143.21
EBIT ($mil)256.9449.45
Net Income ($mil)178.2227.66


Balance Sheet Q1 FY17 Q1 FY16
Cash & Equiv. ($mil)1341.232072.47
Total Assets ($mil)14359.111262.27
Total Debt ($mil)3365.432372.22
Equity ($mil)2973.682317.23


Profitability Q1 FY17 Q1 FY16
Gross Profit Margin87.9585.91
EBITDA Margin60.5458.39
Operating Margin9.752.53
Sales Turnover0.660.64
Return on Assets2.341.12
Return on Equity11.345.46
Debt Q1 FY17 Q1 FY16
Current Ratio1.151.41
Debt/Capital0.530.51
Interest Expense46.7435.54
Interest Coverage5.51.39


Share Data Q1 FY17 Q1 FY16
Shares outstanding (mil)430.99428.29
Div / share0.00.0
EPS0.40.06
Book value / share6.95.41
Institutional Own % n/a n/a
Avg Daily Volume6144912.06199541.0

Valuation


HOLD. NETFLIX INC's P/E ratio indicates a significant premium compared to an average of 185.38 for the Internet & Catalog Retail industry and a significant premium compared to the S&P 500 average of 25.75. For additional comparison, its price-to-book ratio of 22.45 indicates a significant premium versus the S&P 500 average of 3.09 and a significant premium versus the industry average of 18.71. The price-to-sales ratio is well above both the S&P 500 average and the industry average, indicating a premium. Upon assessment of these and other key valuation criteria, NETFLIX INC proves to trade at a premium to investment alternatives within the industry.


Price/Earnings
1 2 3 4 5
premium   discount
  Price/Cash Flow
1 2 3 4 5
premium   discount
NFLX 203.80 Peers 185.38   NFLX NM Peers 27.14

Average. An average P/E ratio can signify an industry neutral price for a stock and an average growth expectation.

NFLX is trading at a valuation on par with its peers.

 

Neutral. The P/CF ratio, a stock’s price divided by the company's cash flow from operations, is useful for comparing companies with different capital requirements or financing structures.

NFLX's P/CF is negative making the measure meaningless.

 
Price/Projected
Earnings
1 2 3 4 5
premium   discount
  Price to
Earnings/Growth
1 2 3 4 5
premium   discount
NFLX 81.09 Peers 110.63   NFLX 1.41 Peers 3.69

Premium. A higher price-to-projected earnings ratio than its peers can signify a more expensive stock or higher future growth expectations.

NFLX is trading at a significant premium to its peers.

 

Discount. The PEG ratio is the stock’s P/E divided by the consensus estimate of long-term earnings growth. Faster growth can justify higher price multiples.

NFLX trades at a significant discount to its peers.

 
Price/Book
1 2 3 4 5
premium   discount
  Earnings Growth
1 2 3 4 5
lower   higher
NFLX 22.45 Peers 18.71   NFLX 162.06 Peers 209.32

Premium. A higher price-to-book ratio makes a stock less attractive to investors seeking stocks with lower market values per dollar of equity on the balance sheet.

NFLX is trading at a premium to its peers.

 

Lower. Elevated earnings growth rates can lead to capital appreciation and justify higher price-to-earnings ratios.

However, NFLX is expected to trail its peers on the basis of its earnings growth rate.

 
Price/Sales
1 2 3 4 5
premium   discount
  Sales Growth
1 2 3 4 5
premium   discount
NFLX 7.02 Peers 4.12   NFLX 32.73 Peers 48.20

Premium. In the absence of P/E and P/B multiples, the price-to-sales ratio can display the value investors are placing on each dollar of sales.

NFLX is trading at a significant premium to its industry.

 

Lower. A sales growth rate that trails the industry implies that a company is losing market share.

NFLX significantly trails its peers on the basis of sales growth

 

 

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