Netflix Inc. Stock Analysis
Netflix Shares. Netflix, Inc. is one of the leading entertainment service networks in the world, with approximately 231 million paying subscribers in over 190 countries. They enjoy TV series, documentaries, feature films, and mobile games of various genres and languages.
Members can participate as much as they want, whenever, wherever, on any internet-connected screen. Members can play, pause, and resume watching – all without commercials. Additionally, the DVD mail delivery service is still available in the United States. In principle, the company operates as a single business segment. Revenue is generated from monthly membership fees for services related to content streaming.
Netflix operates in a strong competitive environment. And this can affect the company’s revenue. Relative service levels, content offerings, competitors’ pricing, and related features can negatively impact the company’s ability to attract and retain customers.
Income by regions:
Netflix finances
The average annual income growth is nearly 20%, but the pace is already slowing down. In 2023, the income increased by only 6.67%, yet this is still a good growth rate considering that the company is large. Very large indeed.
The corporation’s profit dynamics are steadily rising. Over the last 10 years, the average annual growth rate of EPS (Earnings Per Share) was as high as 34.52%. And over the past 5 years, the average annual growth rate of EPS reached 35.03%. Such stable growth is achieved also through share buybacks, for which the company allocates billions of dollars.
The company’s finances are managed by assuming risk. Total liabilities constitute 137% of Equity. However, to cover Long-term debts with the profit of 2023 it would only take 2.62 years. The company has to borrow because Working capital are not always sufficient. However, one US dollar invested in EPS earned a whopping $9.68.
Since the company has not paid any dividends so far, its Return on Retained Profit over 10 years amounted to a remarkable 23.43%. The company effectively reinvests its Retained profit and continues to earn: the average annual growth reaches up to 45%.. The Return on Average Equity (ROAE) over 10 years is about 16%. The annual compound growth rate (CAGR) of the stock’s book value over 10 years was nearly 31%. It’s a very good return.
F_SCORE stands at 7. This is a strong investment outcome. For the second consecutive year, the company’s profitability indicators have been slightly inferior to the previous year. This indicates that the company has already reached its rapid growth’s peak, and in the future, investors should be pleased with expansion results. As known, it is more difficult to manage a large capital company, harder to achieve that every dollar of capital generates increasingly larger cash flows.
If the company’s owners wanted to sell the shares and invest today in the U.S. 10Y bonds and achieve the same return as the company provided in 2023, they would need to sell the shares for at least $284.
The slightly deteriorated profitability indicators per year indicate that the company has already reached its peak of rapid growth, and in the future, investors should be pleased with the results of rapid expansion. As is known, it is more challenging to manage a large capital company and to achieve that every dollar of capital generates increasing cash flows.
In March 2021, the company announced its first share buyback policy. In 2023, a new Share Repurchase „budget” of 10 billion USD was approved. However, in 2023, the company did not repurchase any shares. The term is indefinitely.
The result of the investment evaluation worsened over the year:
Veiklos rezultatų prognozė
| Rodiklis | 2024 | 2025 |
|---|---|---|
| EPS | 9.15 | 11.55 |
| Pelnas | 4 111 470 792 | 5 191 336 719 |
| Pajamos | 53 395 724 571 | 74 161 953 135 |
Netflix Stocks
Netflix shares are listed on the NASDAQ stock exchange. The ticker is NFLX. Since its listing in 2002, the stock price has risen by as much as 51 802%. However, we cannot expect such growth in the future because the company is already established in the market, and price growth will be much more consistent.
The standard deviation of the share price is as high as 54%, and the beta is 1.22. It is a risky stock with significant fluctuations from a technical standpoint. According to the GRAPES method, the price perspective is calculated to be $259.
From the perspective of fixed income, the calculated price perspective shows us that the price in the market at the time of writing may be significantly overestimated. However, we know that investors buy expectations regarding the company’s future performance. PEG was 1.96, o Equity risk premium -2.77%.
Our method’s calculated price perspective is much more optimistic. In a normal market environment, the stock price can freely fluctuate within the range of 10-30% perspective:
Since the idea was announced that stocks are traded at a discount in the market, investors have earned a return of 173% or a 97% average annual pre-tax return. The historical stock price CAGR is 25%.
Forecasts from third parties
Artificial Intelligence:
The analysis of Netflix shares shows that the current share price is $627.46. This is close to their 52-week high of $634.36. Compared to the 52-week low of $315.62, there has been significant price fluctuation over the past year.
Financial analysts suggest that the Netflix share price may decrease slightly. The average 12-month price forecast is $548.71, which is approximately -12.63% from the current price. However, it is important to note that the stock market is volatile and forecasts are not guaranteed.
Netflix is known for its ability to deliver popular and engaging content, which can influence stock prices. Upcoming financial report releases and presentations of new projects can also cause price changes. Investors should carefully monitor market news and Netflix activity reports to make informed decisions.
Tradingview consensus:
Stock Analysis consensus:
Conclusions
The financial analysis of the company’s operations indicates that the stock price has significant potential for growth, and investors’ expectations are high. However, market indicators suggest that the price may be overvalued, or more precisely, it could be too expensive. Our concern lies heavily with the profitability of our investments. Therefore, if we take up this position, it will only be during corrections. That’s what we propose to you.
Price chart
Netflix stocks are entering our Tvenkinio (The Pound) portfolio.