Netflix, Inc.NFLX
NMS • Communication Services
$77.65
P/E
24.61
PEG
0.30
FCF Yield
2.9%
Rev Growth YoY
+16.2% YoY
Gross Margin
51.9%
Health Score
8/10
D/E Ratio
0.46
Confidence
MEDIUM
Business Snapshot
Netflix operates a subscription-based streaming entertainment service, generating revenue primarily through monthly membership fees across a global subscriber base. The company competes in the highly competitive streaming market as a dominant incumbent, facing off against well-capitalized rivals like Disney+, Amazon Prime Video, and Warner Bros. Discovery's Max. As a large-cap company with a market capitalization of approximately $327 billion and trailing twelve-month revenue of $46.89 billion, Netflix possesses significant financial scale to invest heavily in original content. The company's defining characteristic is its massive global subscriber base, which creates a powerful network effect where content investment is spread across a wide audience, enabling high operating leverage and margins.
Financial Health
Gross margin improved significantly to 51.9% from 45.9% in the prior year, while net margin reached an impressive 28.5%, indicating strong operating leverage and profitability. The balance sheet is healthy with a debt-to-equity ratio of just 0.46x and a current ratio of 1.41x, providing ample financial flexibility and covering short-term obligations...
Risk Assessment
- VALUATION — The current price of $77.65 sits at a 59% premium to the Python DCF estimate of $48.83, suggesting potential overvaluation relative to a simplified fair value model.
- EARNINGS QUALITY — The company has beaten earnings estimates in 0 out of the last 4 quarters, indicating a pattern of management guidance that does not align with actual results.
- 52-WEEK POSITION — The current price of $77.65 is well below the 52-week midpoint of $100.18 and 40% below the 52-week high of $129.50, reflecting significant downside momentum.
- TECHNICALS — Price is trading below both the 50-day moving average of $84.12 and the 200-day moving average of $96.10, and a death cross crossover has been confirmed, indicating an established downtrend....
Gross margin improved significantly to 51.9% from 45.9% in the prior year, while net margin reached an impressive 28.5%, indicating strong operating leverage and profitability. The balance sheet is healthy with a debt-to-equity ratio of just 0.46x and a current ratio of 1.41x, providing ample financial flexibility and covering short-term obligations. Free cash flow was a robust $9.46 billion over the trailing twelve months, with a free cash flow yield of 2.9%, demonstrating the company's transition to a highly cash-generative business model. Overall, Netflix possesses a fortress-like financial profile with expanding margins, low leverage, and substantial cash generation that supports significant reinvestment in content and potential shareholder returns through buybacks.
- VALUATION — The current price of $77.65 sits at a 59% premium to the Python DCF estimate of $48.83, suggesting potential overvaluation relative to a simplified fair value model. - EARNINGS QUALITY — The company has beaten earnings estimates in 0 out of the last 4 quarters, indicating a pattern of management guidance that does not align with actual results. - 52-WEEK POSITION — The current price of $77.65 is well below the 52-week midpoint of $100.18 and 40% below the 52-week high of $129.50, reflecting significant downside momentum. - TECHNICALS — Price is trading below both the 50-day moving average of $84.12 and the 200-day moving average of $96.10, and a death cross crossover has been confirmed, indicating an established downtrend.
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