NFLX Stock Study (10-22-26)

Posted by Mark on November 9, 2026 at 06:54 | Last modified: October 23, 2026 11:46

I recently did a stock study on Netflix Inc. (NFLX, $65.04). Previous studies are here, 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 EPS at annualized rates of 18.8% and 49.9% (fractional base), respectively. Lines are mostly up, straight, and parallel except for EPS dip in ’22. Five-year EPS R^2 is 0.82, and Value Line (VL) gives an Earnings Predictability score of 70. Shares outstanding decrease 0.9% (0.1% per year).

Over the past decade, PTPM leads peer and industry averages while increasing from 3.0% to 28.2% (’25) with a last-5-year mean of 21.7%. ROE leads peer and industry averages while increasing from 7.3% to 41.1% (’25) with a last-5-year mean of 31.2% (shareholder equity consistently positive and increasing at a 29.1%/year clip). Debt-to-Capital is less than industry averages but greater than peers despite falling from 55.7% to 35.2% (’25) with a last-5-year mean of 41.1%.

Quick ratio is 0.84 and interest coverage 18.2 per M* who assigns “Narrow” Economic Moat, “Exemplary” rating for Capital Allocation, and a B grade for Financial Health (per BI website). VL gives an A rating for Financial Strength.

RightStock—a new tool on the BI website that I am tracking for informational purposes—gives a fitness score of 88 (“strong”) and opportunity score of 91 (“excellent,” citing a poor 1.4 PEG).

With regard to sales growth:

• YF gives YOY ACE 13.1% and 10.8% for ’26 and ’27, respectively (based on 40 analysts).
• Zacks gives YOY ACE 13.3% and 11.3% for ’26 and ’27, respectively (16 analysts).
• VL projects 11.6% per year from ’25-’30.
• CFRA projects 13.3% YOY and 11.7% per year for ’26 and ’25-’27, respectively.
• M* gives 2-year annualized ACE of 12.4% and projects 10.1% from ’25-’30 in Equity Report.

My 10.0% forecast is below the range.

With regard to EPS growth:

• MarketWatch gives ACE 21.4% and 20.6% per year for ’25-’27 and ’25-’28 (based on 56 analysts).
• Nasdaq.com gives ACE 12.2% and 12.5% per year for ’26-’28 and ’26-’29 (15 / 9 / 5 analysts for ’26 / ’28 / ’29).
• Seeking Alpha projects 4-year annualized growth of 21.2%.
• Argus projects 5-year annualized of 15.0%.
• Finviz gives 5-year annualized ACE of 21.0% (23).
• LSEG has LTG at 20.7%.
• YF gives YOY ACE 40.9% and 5.9% for ’26 and ’27, respectively (32).
• Zacks gives YOY ACE 41.9% and 5.8% for ’26 and ’27 along with 5-year annualized 19.7% (15).
• VL projects 15.7% per year from ’25-’30.
• CFRA projects 42.3% YOY and 22.6% per year for ’26 and ’25-’27, respectively.
• M* gives long-term ACE of 16.3% and projects 16.6% from ’25-’30 in Equity Report.

My 12.0% forecast is below the long-term-estimate range (mean of eight: 18.3%). Initial value is ’25 EPS of $2.53/share rather than 2026 Q2 $3.18 (TTM).

My Forecast High P/E is 30.0. Over the past 10 years, high P/E falls from 301 to 53.0 (’25) with last-5-year mean of 53.2 and a last-5-year-mean average P/E of 40.4. I am below the range.

My Forecast Low P/E is 20.0. Over the past 10 years, low P/E falls from 186 to 32.5 (’25) with a last-5-year mean of 27.7. I am forecasting near bottom of the range (only 16.4 in ’22 is less).

My Low Stock Price Forecast (LSPF) of $50.60 is default based on initial value from above: 22.2% less than previous close and 22.3% less than the 52-week low.

These inputs land NFLX in the BUY zone with a U/D ratio of 3.6. Total Annualized Return (TAR) is 14.3%.

PAR (using Forecast Average—not High—P/E) of 10.2% is decent for a large-size company. If a solid margin of safety (MOS) backs this study, then I can proceed based on TAR instead.

To assess MOS, I start by comparing my inputs with those of Member Sentiment (MS). Based on 502 studies done in the past 90 days (my study and 117 outliers excluded), averages (lower of mean/median) for projected sales growth, projected EPS growth, Forecast High P/E, and Forecast Low P/E are 11.8%, 13.2%, 35.0, and 23.2, respectively. I am lower across the board. VL projects a future average P/E of 30.0 that is greater than MS (29.1) and greater than mine (25.0).

MS high / low EPS are $5.71 / $3.13 versus my $4.46 / $2.53 (per share). My high EPS is less due to a lower growth rate and initial value. VL high EPS of $5.25 is in the middle.

MS LSPF of $58.20 implies a Forecast Low P/E of 18.6: less than the above-stated 23.2. MS LSPF is 19.9% less than the default $3.13/share * 23.2 = $72.62 resulting in more conservative zoning. MS LSPF is still 15.0% greater than mine.

MOS is robust in the study because my inputs are below/near most historical/analyst/MS estimates and ranges. Supporting the MOS is MS TAR exceeding mine by 7.6% (too much, really) per year and my lower LSPF.

With regard to valuation, PEG is 0.97 and 1.6 per Zacks and my projected P/E, respectively: fairly valued (0.73 per M*). Relative Value [(current P/E) / 5-year-mean average P/E] is extremely low at 0.53. “Quick and dirty” cash flow has stock undervalued by 55% with capex excluded (Google AI directs otherwise). M* reports stock at an 18% discount.

Per my SSG, NFLX is a U/D BUY right now under $71 share. [133.8 / ((14.87 / 100 ) +1 ) ^ 5] ~ $67 meets the BetterInvesting® TAR criterion given forecast high price ~$134.

Full disclosure: I currently own NFLX shares.

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