Netflix Inc (NASDAQ: NFLX)

Sector: Communication Services Industry: Entertainment CIK: 0001065280
Market Cap 398.09 Bn
P/B 15.34
P/E 38.16
P/S 9.18
ROIC (Qtr) 25.95
Div Yield % 0.00
Rev 1y % (Qtr) 17.16
Total Debt (Qtr) 14.46 Bn
Debt/Equity (Qtr) 0.56

About

Price action

Investment thesis

Bull case

  • Strong operating cash flow of 9.57B provides robust 0.66x coverage of total debt 14.46B, indicating excellent debt servicing capability and financial flexibility.
  • Operating cash flow of 9.57B provides strong 32.38x coverage of stock compensation 295.65M, indicating sustainable incentive practices.
  • Operating cash flow of 9.57B provides exceptional 13.03x coverage of interest expenses 734.72M, showing strong debt service capability.
  • Robust free cash flow of 8.97B exceeds capital expenditure of 607.56M by 14.76x, indicating strong organic growth funding capability.
  • Tangible assets of 22.29B provide exceptional 12.93x coverage of deferred revenue 1.72B, showing strong service capability backing.

Bear case

  • Investment activities of 1.14B provide weak support for R&D spending of 3.28B, which is 0.35x, suggesting potentially insufficient investment in innovation relative to other capital deployment.
  • Operating earnings of 12.82B show weak coverage of depreciation charges of 16.15B, with a 0.79 ratio indicating high capital intensity and potential reinvestment needs.
  • Free cash flow of 8.97B represents just -4.89x of debt issuance (1.83B), suggesting concerning reliance on leverage rather than internal cash generation for growth.
  • High depreciation of 16.15B relative to operating cash flow of 9.57B, which is 1.69x suggests significant maintenance capital requirements affecting free cash flow.
  • Retained earnings of 39.86B provide limited buffer against comprehensive income items of (719.26M), which is -55.42x, indicating elevated exposure to market risks.

Peer comparison

Companies in the Entertainment
S.No. Ticker Company Market Cap P/E P/S Total Debt (Qtr)
1 NFLX Netflix Inc 398.09 Bn 38.16 9.18 14.46 Bn
2 DIS Walt Disney Co 204.13 Bn 16.46 2.16 42.03 Bn
3 WBD Warner Bros. Discovery, Inc. 70.69 Bn 145.75 1.87 33.52 Bn
4 FWONA Liberty Media Corp 53.12 Bn -399.43 13.15 7.04 Bn
5 LYV Live Nation Entertainment, Inc. 33.40 Bn 103.67 1.36 9.39 Bn
6 FOXA Fox Corp 33.26 Bn 16.34 2.02 6.60 Bn
7 PSKY Paramount Skydance Corp 18.94 Bn -1,353.00 0.66 14.73 Bn
8 TKO TKO Group Holdings, Inc. 17.56 Bn 76.76 4.05 4.04 Bn

Industry comparisons

Current Valuation Value Ind Avg Percentile
EV to Assets EV to Assets 7.36 1.53
EV to Cash from Ops. EV/CFO 42.23 25.10
EV to Debt EV to Debt 27.96 5.03
EV to EBIT EV/EBIT 31.53 165.24
EV to EBITDA EV/EBITDA 14.05 -156.71
EV to Free Cash Flow [EV/FCF] EV/FCF 45.10 72.07
EV to Market Cap EV to Market Cap 1.02 2.12
EV to Revenue EV/Rev 9.32 6.42
Price to Book Value [P/B] P/B 15.34 2.40
Price to Earnings [P/E] P/E 38.16 -114.33
Dividend Metrics Value Ind Avg Percentile
Dividend Coverage Ratio Dividend Coverage Ratio 0.00 1.03
Dividend Payout Ratio % Div Payout % (Qtr) 0.00 -17.28
Dividend per Basic Share Div per Share (Qtr) 0.00 0.14
FCF Dividend Payout Ratio % FCF Div Payout % (Qtr) 0.00 7.73
Interest Coverage Int. cover (Qtr) 17.45 -38.17
Growth Metrics Value Ind Avg Percentile
Capex Growth (1y) % Capex 1y % (Qtr) -67.60 -33.75
Cash and Equivalents Growth (1y) % Cash & Equiv 1y % (Qtr) 24.54 248.04
Dividend Growth (1y) % Dividend Growth (1y) % 0.00 0.52
EBIAT Growth (1y) % EBIAT 1y % (Qtr) 31.91 -100.15
EBITDA Growth (1y) % EBITDA 1y % (Qtr) 15.75 -28.24
EBIT Growth (1y) % EBIT 1y % (Qtr) 32.47 -85.91
EBT Growth (1y) % EBT 1y % (Qtr) 34.63 24.10
EPS Growth (1y) % EPS 1y % (Qtr) 35.43 18.31
FCF Growth (1y) % FCF 1y % (Qtr) 25.85 118.70
Gross Profit Growth (1y) % Gross Profit 1y % (Qtr) 22.64 30.85
Liquidity Ratios Value Ind Avg Percentile
Asset Utilization Ratio Asset Util Ratio (Qtr) 0.79 0.60
Cash Payout Ratio Cash Payout (Qtr) 0.00 0.04
Cash Ratio Cash Ratio (Qtr) 0.95 0.45
Current Ratio Curr Ratio (Qtr) 1.33 1.09
Debt to Equity Ratio Debt/Equity (Qtr) 0.56 1.01
Interest Cover Ratio Int Coverage (Qtr) 17.45 -38.17
Times Interest Earned Times Interest Earned (Qtr) 17.45 -38.17
Profitability Value Ind Avg Percentile
EBITDA Margin % EBITDA Margin % (Qtr) 66.80 -65.26
EBIT Margin % EBIT Margin % (Qtr) 29.56 -79.53
EBT Margin % EBT Margin % (Qtr) 27.87 -82.47
Gross Margin % Gross Margin % (Qtr) 48.10 35.56
Net Profit Margin % Net Margin % (Qtr) 24.00 -83.18