Netflix Stock Sinks As Market Gains: What You Should Know

In the latest trading session, Netflix NFLX closed at $358.98, marking a -1.61% move from the previous day. This change lagged the S&P 500's 0.88% gain on the day. Elsewhere, the Dow lost 0.11%, while the tech-heavy Nasdaq lost 3.76%.

Prior to today's trading, shares of the Internet video service had gained 13.61% over the past month. This has outpaced the Consumer Discretionary sector's loss of 4.88% and the S&P 500's loss of 0.38% in that time.

Netflix will be looking to display strength as it nears its next earnings release. On that day, Netflix is projected to report earnings of $2.80 per share, which would represent a year-over-year decline of 12.5%. Meanwhile, our latest consensus estimate is calling for revenue of $8.25 billion, up 3.47% from the prior-year quarter.

For the full year, our Zacks Consensus Estimates are projecting earnings of $11.19 per share and revenue of $33.77 billion, which would represent changes of +12.46% and +6.8%, respectively, from the prior year.

Any recent changes to analyst estimates for Netflix should also be noted by investors. These revisions typically reflect the latest short-term business trends, which can change frequently. As a result, we can interpret positive estimate revisions as a good sign for the company's business outlook.

Based on our research, we believe these estimate revisions are directly related to near-team stock moves. Investors can capitalize on this by using the Zacks Rank. This model considers these estimate changes and provides a simple, actionable rating system.

The Zacks Rank system ranges from #1 (Strong Buy) to #5 (Strong Sell). It has a remarkable, outside-audited track record of success, with #1 stocks delivering an average annual return of +25% since 1988. Within the past 30 days, our consensus EPS projection has moved 0.67% higher. Netflix is holding a Zacks Rank of #3 (Hold) right now.

Digging into valuation, Netflix currently has a Forward P/E ratio of 32.6. This represents a premium compared to its industry's average Forward P/E of 11.71.

Investors should also note that NFLX has a PEG ratio of 1.45 right now. This metric is used similarly to the famous P/E ratio, but the PEG ratio also takes into account the stock's expected earnings growth rate. The Broadcast Radio and Television industry currently had an average PEG ratio of 1.4 as of yesterday's close.

The Broadcast Radio and Television industry is part of the Consumer Discretionary sector. This industry currently has a Zacks Industry Rank of 120, which puts it in the top 48% of all 250+ industries.

The Zacks Industry Rank gauges the strength of our individual industry groups by measuring the average Zacks Rank of the individual stocks within the groups. Our research shows that the top 50% rated industries outperform the bottom half by a factor of 2 to 1.

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