NFLX Stock Study (10-21-25)

Posted by Mark on December 30, 2024 at 07:19 | Last modified: October 21, 2025 10:18

I recently did a stock study on Netflix Inc. (NFLX, $1238.56). Previous studies are here, here, here, here, and here.

M* writes:

     > Netflix’s relatively simple business model involves only one business,
     > its streaming service. It has the biggest television entertainment
     > subscriber base in both the US and the collective international
     > market, with more than 300 million subscribers globally. Netflix has
     > exposure to nearly the entire global population outside of China. The
     > firm has traditionally avoided live programming or sports content,
     > instead focusing on on-demand access to episodic television, movies,
     > and documentaries. The firm introduced ad-supported subscription
     > plans in 2022, giving the firm exposure to the advertising market
     > in addition to the subscription fees that have historically
     > accounted for nearly all its revenue.

Over the past decade, this large-size company has grown sales and earnings at annualized rates of 21.6% and 59.2%, respectively. Lines are mostly up, straight, and parallel except for an EPS decline in ’22. 5-year EPS R^2 is 0.82 and Value Line (VL) gives an Earnings Predictability score of 65.

Over the past decade, PTPM is about even with peer and industry averages despite trending higher from 2.1% (’15) to 25.6% (’24) with a last-5-year mean of 18.6%. ROE is also about even with peer and industry averages despite trending up from 5.5% (’15) to 37.3% (’24) with a last-5-year mean of 28.2%. Debt-to-Capital is a bit higher than peer and industry averages despite falling from 51.6% (’15) to 38.6% (’24) for a last-5-year mean of 40.6%.

Quick Ratio and Interest Coverage are 1.12 and 16.7 per M* who assigns “Narrow” Economic Moat, rates the company “Exemplary” for Capital Allocation, and gives an A grade for Financial Health (per BI website). VL gives an A+ rating for Financial Strength.

With regard to sales growth:

• YF projects YOY 15.5% and 12.9% for ’25 and ’26, respectively (based on 43 analysts).
• Zacks projects YOY 15.6% and 13.0% for ’25 and ’26, respectively (12 analysts).
• VL projects 12.4% growth per year from ’24-’29.
• CFRA projects 16.7% YOY and 13.8% per year for ’25 and ’24-’26, respectively.
• M* provides a 2-year ACE of 14.0%/year while projecting 10.0% annualized growth x5 years (analyst note).

My 10.0% forecast is at bottom of the range.

With regard to EPS growth:

• MarketWatch projects annualized ACE of 27.9% and 25.9% for ’24-’26 and ’24-’27, respectively (based on 55 analysts).
• Nasdaq.com projects 22.3% and 19.5% per year for ’25-’27 and ’25-’28 (12, 7, and 3 analysts for ’25, ’27, and ’28).
• Seeking Alpha projects 4-year annualized growth of 24.3%.
• Argus projects 5-year annualized growth of 15.0%.
• Finviz gives 5-year annualized growth ACE of 25.8% (17).
• LSEG LTG forecast is 22.3%.
• YF projects YOY 32.5% and 23.3% for ’25 and ’26, respectively (37).
• Zacks projects YOY 31.6% and 23.6% for ’25 and ’26, respectively (12), along with 5-year annualized growth of 22.8%.
• VL projects annualized growth of 17.8% from ’24-’29.
• CFRA projects 32.1% YOY and 21.9% per year for ’25 and ’24-’26 along with a 3-year CAGR of 20.0%.
• M* gives a long-term annualized growth estimate of 28.8%.

My 15.0% forecast is at bottom of the long-term-estimate range (mean of seven: 22.4%). I will use ’24 EPS of $19.83/share as the initial value rather than 2025 Q2 $23.47 (annualized).

My Forecast High P/E is 35.0. Over the past 10 years, high P/E decreases from triple digits to 47.5 (’24) with a last-5-year mean of 61.5 and a last-5-year-mean average P/E of 46.1. At some point, I expect P/E to fall back to earth. For now, I am forecasting at the upper end of my comfort zone.

My Forecast Low P/E is 23.0. Over the past 10 years, low P/E decreases from triple digits to 23.3 (’24) with a last-5-year mean of 30.7. I am forecasting toward the bottom of the range (only 16.4 in ’22 is less).

My Low Stock Price Forecast (LSPF) is $744.00. Default $466.10 based on initial value given above seems unreasonably low at 63.2% (38.7%) less than the previous close (52-week low). My forecast, the 52-week low, is 39.9% less than previous close.

These inputs land NFLX in the SELL zone with a U/D ratio of 0.3. Total Annualized Return (TAR) is 2.4%.

PAR (using Forecast Average—not High—P/E) of NEGATIVE 1.4% is unthinkable as a new investment prospect. If a healthy margin of safety (MOS) anchors the study, then I can proceed based on TAR albeit much less than the current risk-free rate.

To assess MOS, I compare my inputs with those of Member Sentiment (MS). Based on 149 studies (my study and 67 outliers excluded) over the past 90 days, averages (lower of mean/median) for projected sales growth, projected EPS growth, Forecast High P/E, and Forecast Low P/E are 12.8%, 17.5%, 48.0, and 28.5. I am lower across the board. VL’s projected average annual P/E of 39.5 is greater than MS (38.3) and much greater than mine (29.0).

MS high / low EPS are $51.46 / $22.72 versus my $39.89 / $19.83 (per share). My high EPS is less due to a lower growth rate. VL is in the middle at $45.00.

MS LSPF of $720.50 implies a Forecast Low P/E of 31.7: more than the above-stated 28.5. MS LSPF is 11.3% greater than the default $22.72/share * 28.5 = $647.52, which results in more aggressive zoning. MS LSPF is 3.2% less than mine, however.

I believe MOS is robust in this study because my inputs are near or below respective analyst/historical ranges and MS averages. In support is MS TAR (14.6%): 12.2% per year greater than mine.

With regard to valuation, PEG is 2.00 and 3.10 per Zacks and my projected P/E, respectively: somewhat overvalued (1.61 per M*). Relative Value [(current P/E) / 5-year-mean average P/E] is also a bit expensive at 1.15.

Despite my SELL rating, existing shareholders may want to HOLD because sales growth is still projected in the double digits.

Per U/D, NFLX is a BUY under $907. BI TAR criterion is met at 1396 / ((14.87 / 100 ) +1 ) ^ 5 = $698 given forecast high price $1396 (no dividend). I am not surprised to see a stock up 68% in the past 12 months far extended from a buy point.

Full disclosure: I currently own NFLX shares.

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