NasdaqGS:NFLX

Stock Analysis Report

Executive Summary

Netflix, Inc. provides Internet entertainment services.

Rewards

Trading at 10.8% below its fair value

Earnings are forecast to grow 25.83% per year

Earnings grew by 54.1% over the past year

Risk Analysis

Debt is not well covered by operating cash flow

High level of non-cash earnings

Highly volatile share price over past 3 months



Snowflake Analysis

High growth potential with proven track record.


Similar Companies

Walt Disney

NYSE:DIS

Share Price & News

How has Netflix's share price performed over time and what events caused price changes?


Latest Share Price and Events

Stable Share Price: NFLX's share price has been volatile over the past 3 months.


Market Performance


7 Day Return

1.3%

NFLX

0.4%

US Entertainment

0.5%

US Market


1 Year Return

8.2%

NFLX

21.7%

US Entertainment

20.3%

US Market

Return vs Industry: NFLX underperformed the US Entertainment industry which returned 21.7% over the past year.

Return vs Market: NFLX underperformed the US Market which returned 20.3% over the past year.


Shareholder returns

NFLXIndustryMarket
7 Day1.3%0.4%0.5%
30 Day14.2%2.6%2.0%
90 Day24.4%7.3%9.4%
1 Year8.2%8.2%22.6%21.7%22.8%20.3%
3 Year170.5%170.5%56.9%51.8%50.1%40.4%
5 Year459.7%459.7%94.6%82.7%73.1%54.1%

Price Volatility Vs. Market

How volatile is Netflix's share price compared to the market and industry in the last 5 years?


Simply Wall St News

Valuation

Is Netflix undervalued compared to its fair value and its price relative to the market?

10.8%

Undervalued compared to fair value


Share Price vs. Fair Value

Below Fair Value: NFLX ($386.19) is trading below our estimate of fair value ($432.75)

Significantly Below Fair Value: NFLX is trading below fair value, but not by a significant amount.


Price To Earnings Ratio

PE vs Industry: NFLX is poor value based on its PE Ratio (90.6x) compared to the Entertainment industry average (25x).

PE vs Market: NFLX is poor value based on its PE Ratio (90.6x) compared to the US market (18.3x).


Price to Earnings Growth Ratio

PEG Ratio: NFLX is poor value based on its PEG Ratio (3.5x)


Price to Book Ratio

PB vs Industry: NFLX is overvalued based on its PB Ratio (22.4x) compared to the US Entertainment industry average (2.5x).


Next Steps

Future Growth

How is Netflix forecast to perform in the next 1 to 3 years based on estimates from 34 analysts?

25.8%

Forecasted annual earnings growth


Earnings and Revenue Growth Forecasts


Analyst Future Growth Forecasts

Earnings vs Savings Rate: NFLX's forecast earnings growth (25.8% per year) is above the savings rate (1.7%).

Earnings vs Market: NFLX's earnings (25.8% per year) are forecast to grow faster than the US market (14.2% per year).

High Growth Earnings: earnings are expected to grow significantly over the next 3 years.

Revenue vs Market: NFLX's revenue (14.6% per year) is forecast to grow faster than the US market (7.6% per year).

High Growth Revenue: NFLX's revenue (14.6% per year) is forecast to grow slower than 20% per year.


Earnings per Share Growth Forecasts


Future Return on Equity

Future ROE: NFLX's Return on Equity is forecast to be high in 3 years time (29.6%)


Next Steps

Past Performance

How has Netflix performed over the past 5 years?

49.8%

Historical annual earnings growth


Earnings and Revenue History

Quality Earnings: NFLX has a high level of non-cash earnings.

Growing Profit Margin: NFLX's current net profit margins (9.3%) are higher than last year (7.7%).


Past Earnings Growth Analysis

Earnings Trend: NFLX's earnings have grown significantly by 49.8% per year over the past 5 years.

Accelerating Growth: NFLX's earnings growth over the past year (54.1%) exceeds its 5-year average (49.8% per year).

Earnings vs Industry: NFLX earnings growth over the past year (54.1%) exceeded the Entertainment industry -8.9%.


Return on Equity

High ROE: Whilst NFLX's Return on Equity (24.62%) is high, this metric is skewed due to their high level of debt.


Return on Assets


Return on Capital Employed


Next Steps

Financial Health

How is Netflix's financial position?


Financial Position Analysis

Short Term Liabilities: NFLX's short term assets ($6.2B) do not cover its short term liabilities ($6.9B).

Long Term Liabilities: NFLX's short term assets ($6.2B) do not cover its long term liabilities ($19.5B).


Debt to Equity History and Analysis

Debt Level: NFLX's debt to equity ratio (194.7%) is considered high.

Reducing Debt: NFLX's debt to equity ratio has increased from 45.2% to 194.7% over the past 5 years.

Debt Coverage: NFLX's operating cash flow is negative, therefore debt is not well covered.

Interest Coverage: NFLX's interest payments on its debt are well covered by EBIT (4.7x coverage).


Balance Sheet

Inventory Level: NFLX has a low level of unsold assets or inventory.

Debt Coverage by Assets: NFLX's debt is not covered by short term assets (assets are 0.4x debt).


Next Steps

Dividend

What is Netflix's current dividend yield, its reliability and sustainability?


Dividend Yield vs Market

companyn/amarketbottom25%1.4%markettop25%3.7%industryaverage1.2%forecastin3Years0%

Current dividend yield vs market & industry

Notable Dividend: Unable to evaluate NFLX's dividend yield against the bottom 25% of dividend payers, as the company has not reported any payouts.

High Dividend: Unable to evaluate NFLX's dividend yield against the top 25% of dividend payers, as the company has not reported any payouts.


Stability and Growth of Payments

Stable Dividend: Insufficient data to determine if NFLX's dividends per share have been stable in the past.

Growing Dividend: Insufficient data to determine if NFLX's dividend payments have been increasing.


Current Payout to Shareholders

Dividend Coverage: Insufficient data to calculate payout ratio to determine if its dividend payments are covered by earnings.


Future Payout to Shareholders

Future Dividend Coverage: No need to calculate the sustainability of NFLX's dividend in 3 years as they are not forecast to pay a notable one for the US market.


Next Steps

Management

How experienced are the management team and are they aligned to shareholders interests?

5.1yrs

Average management tenure


CEO

Wilmot Hastings (59yo)

21.4yrs

Tenure

US$36,080,417

Compensation

Mr. Wilmot Reed Hastings, Jr., is President of Netflix, Inc. and has been its Chairman and Chief Executive Officer from 1997 and September 1998 respectively. Mr. Hastings co-founded Netflix in 1997. In 199 ...


CEO Compensation Analysis

Compensation vs Market: Wilmot's total compensation ($USD36.08M) is above average for companies of similar size in the US market ($USD10.78M).

Compensation vs Earnings: Wilmot's compensation has increased by more than 20% in the past year.


Leadership Team

NamePositionTenureCompensationOwnership
Wilmot Hastings
Co-Founder21.4yrsUS$36.08m1.2% $2.0b
Theodore Sarandos
Chief Content Officer19.9yrsUS$29.65mno data
Gregory Peters
Chief Product Officer6.6yrsUS$14.82m0.0030% $5.0m
Spencer Neumann
Chief Financial Officer1.1yrsno datano data
Spencer Wang
Vice President of Finance & Investor Relations5.1yrsno datano data
David Hyman
Chief Legal Officer & Secretary18.1yrsUS$5.11m0.0072% $12.2m
Rachel Whetstone
Chief Communications Officer1.5yrsno data0.000070% $118.6k
Jaclyn Lee-Joe
Chief Marketing Officer0.4yrsno datano data
William Holmes
Chief Business Development Officer0yrsno datano data
Jessica Neal
Chief Talent Officer2.3yrsno datano data

5.1yrs

Average Tenure

50yo

Average Age

Experienced Management: NFLX's management team is seasoned and experienced (5.1 years average tenure).


Board Members

NamePositionTenureCompensationOwnership
Wilmot Hastings
Co-Founder21.4yrsUS$36.08m1.2% $2.0b
Jay Hoag
Lead Independent Director0yrsUS$377.86k0.12% $206.7m
Timothy Haley
Independent Director21.7yrsUS$377.86kno data
Richard Barton
Independent Director17.8yrsUS$377.86k0.0016% $2.7m
Ann Mather
Independent Director9.4yrsUS$377.86kno data
Leslie Kilgore
Independent Director8.1yrsUS$377.86k0.0080% $13.6m
Bradford Smith
Independent Director4.9yrsUS$377.86k0.0015% $2.5m
Susan Rice
Independent Director1.9yrsUS$285.98kno data
Anne Sweeney
Independent Director4.9yrsUS$377.86kno data
Rodolphe Belmer
Independent Director2.1yrsUS$347.15kno data

8.1yrs

Average Tenure

59yo

Average Age

Experienced Board: NFLX's board of directors are considered experienced (8.1 years average tenure).


Ownership

Who are the major shareholders and have insiders been buying or selling?


Insider Trading Volume

Insider Buying: Insufficient data to determine if insiders have bought more shares than they have sold in the past 3 months.


Recent Insider Transactions

Ownership Breakdown

Dilution of Shares: Shareholders have not been meaningfully diluted in the past year.


Top Shareholders

Company Information

Netflix, Inc.'s company bio, employee growth, exchange listings and data sources


Key Information

  • Name: Netflix, Inc.
  • Ticker: NFLX
  • Exchange: NasdaqGS
  • Founded: 1997
  • Industry: Movies and Entertainment
  • Sector: Media
  • Market Cap: US$169.463b
  • Shares outstanding: 438.81m
  • Website: https://www.netflix.com

Number of Employees


Location

  • Netflix, Inc.
  • 100 Winchester Circle
  • Los Gatos
  • California
  • 95032
  • United States

Listings

TickerExchangePrimary SecuritySecurity TypeCountryCurrencyListed on
NFLXNasdaqGS (Nasdaq Global Select)YesCommon StockUSUSDMay 2002
NFCXTRA (XETRA Trading Platform)YesCommon StockDEEURMay 2002
NFCDB (Deutsche Boerse AG)YesCommon StockDEEURMay 2002
NFLX *BMV (Bolsa Mexicana de Valores)YesCommon StockMXMXNMay 2002
NFLXSWX (SIX Swiss Exchange)YesCommon StockCHCHFMay 2002
0QYILSE (London Stock Exchange)YesCommon StockGBUSDMay 2002
NFLXBIT (Borsa Italiana)YesCommon StockITEURMay 2002
NFLXWBAG (Wiener Boerse AG)YesCommon StockATEURMay 2002
NFLXBVL (Bolsa de Valores de Lima)YesCommon StockPEUSDMay 2002
NFLX34BOVESPA (Bolsa de Valores de Sao Paulo)BDR EACH REPR 1 COM SHSBRBRLAug 2012
NFLXBASE (Buenos Aires Stock Exchange)CEDEAR EACH 16 REP 1 COM USD0.001ARARSApr 2019

Biography

Netflix, Inc. provides Internet entertainment services. The company operates in three segments: Domestic streaming, International streaming, and Domestic DVD. It offers TV series, documentaries, and feature films across various genres and languages. The company provides members the ability to receive streaming content through a host of Internet-connected screens, including TVs, digital video players, television set-top boxes, and mobile devices. It also provides DVDs-by-mail membership services. The company has approximately 139 million paid members in 190 countries. Netflix, Inc. was founded in 1997 and is headquartered in Los Gatos, California. 


Company Analysis and Financial Data Status

All financial data provided by Standard & Poor's Capital IQ.
DataLast Updated (UTC time)
Company Analysis2020/02/20 00:55
End of Day Share Price2020/02/19 00:00
Earnings2019/12/31
Annual Earnings2019/12/31


Unless specified all financial data is based on a yearly period but updated quarterly. This is known as Trailing Twelve Month (TTM) or Last Twelve Month (LTM) Data. Learn more here.