Netflix Inc

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NFLX : NASDAQ : Services
$133.7 up 4.52 | 3.5%
Today's Range: 130.58 - 133.93
Avg. Daily Volume: 8431700.0
01/13/17 - 4:00 PM ET

Financial Analysis


NETFLIX INC's gross profit margin for the third quarter of its fiscal year 2016 is essentially unchanged when compared to the same period a year ago. The company grew its sales and net income significantly quarter versus same quarter a year prior, and was able to outpace the average competitor in the industry when comparing net income growth, but not when comparing revenue growth. NETFLIX INC has very weak liquidity. Currently, the Quick Ratio is 0.30 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.

During the same period, stockholders' equity ("net worth") has increased by 16.68% 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 Q3 FY16 Q3 FY15
Net Sales ($mil)2290.191738.36
EBITDA ($mil)1363.84979.68
EBIT ($mil)106.0473.64
Net Income ($mil)51.5229.43


Balance Sheet Q3 FY16 Q3 FY15
Cash & Equiv. ($mil)1343.262609.64
Total Assets ($mil)12347.349916.27
Total Debt ($mil)2373.972400.0
Equity ($mil)2528.972167.32


Profitability Q3 FY16 Q3 FY15
Gross Profit Margin87.9984.59
EBITDA Margin59.5556.35
Operating Margin4.634.24
Sales Turnover0.660.65
Return on Assets1.321.64
Return on Equity6.447.51
Debt Q3 FY16 Q3 FY15
Current Ratio1.181.67
Debt/Capital0.480.53
Interest Expense35.5435.33
Interest Coverage2.982.08


Share Data Q3 FY16 Q3 FY15
Shares outstanding (mil)429.15427.39
Div / share0.00.0
EPS0.120.07
Book value / share5.895.07
Institutional Own % n/a n/a
Avg Daily Volume8410348.09953134.0

Valuation


HOLD. NETFLIX INC's P/E ratio indicates a significant premium compared to an average of 167.36 for the Internet & Catalog Retail industry and a significant premium compared to the S&P 500 average of 25.49. For additional comparison, its price-to-book ratio of 21.92 indicates a significant premium versus the S&P 500 average of 2.84 and a significant premium versus the industry average of 17.54. 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 349.14 Peers 167.36   NFLX NM Peers 24.49

Premium. A higher P/E ratio than its peers can signify a more expensive stock or higher growth expectations.

NFLX is trading at a significant premium to 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 135.98 Peers 1561.42   NFLX 8.15 Peers 1.56

Discount. A lower price-to-projected earnings ratio than its peers can signify a less expensive stock or lower future growth expectations.

NFLX is trading at a significant discount to its peers.

 

Premium. 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 premium to its peers.

 
Price/Book
1 2 3 4 5
premium   discount
  Earnings Growth
1 2 3 4 5
lower   higher
NFLX 21.92 Peers 17.54   NFLX -1.91 Peers 288.10

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 significantly 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 6.78 Peers 3.73   NFLX 26.94 Peers 26.52

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.

 

Average. Comparing a company's sales growth to its industry helps to determine if the company is adding or losing market share.

NFLX is keeping pace with its peers on the basis of sales growth.

 

 

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