Netflix Inc (NFLX, Financial) has recently been in the spotlight, drawing interest from investors and financial analysts due to its robust financial stance. With shares currently priced at $474.95, Netflix Inc has witnessed a daily gain of 0%, marked against a three-month change of 16.33%. A thorough analysis, underlined by the GF Score, suggests that Netflix Inc is well-positioned for substantial growth in the near future.
What Is the GF Score?
The GF Score is a stock performance ranking system developed by GuruFocus using five aspects of valuation, which has been found to be closely correlated to the long-term performances of stocks by backtesting from 2006 to 2021. The stocks with a higher GF Score generally generate higher returns than those with a lower GF Score. Therefore, when picking stocks, investors should invest in companies with high GF Scores. The GF Score ranges from 0 to 100, with 100 as the highest rank.
- Financial strength rank: 7/10
- Profitability rank: 10/10
- Growth rank: 10/10
- GF Value rank: 3/10
- Momentum rank: 9/10
Each one of these components is ranked and the ranks also have positive correlation with the long term performances of stocks. The GF score is calculated using the five key aspects of analysis. Through backtesting, we know that each of these key aspects has a different impact on the stock price performance. Thus, they are weighted differently when calculating the total score. With high ranks in financial strength, profitability, and growth, but a lower GF Value rank, GuruFocus assigned Netflix Inc a GF Score of 93 out of 100, which signals the highest outperformance potential.
Understanding Netflix Inc's Business
Netflix Inc, with a market cap of $207.88 billion and sales of $32.74 billion, operates as the leading streaming video on demand service, available in almost every country worldwide except China. The company primarily generates revenue from subscriptions to its service and is renowned for delivering both original and third-party digital video content to a variety of devices, including PCs, internet-connected TVs, and consumer electronic devices. As the largest SVOD platform globally, Netflix boasts over 220 million subscribers, reflecting its dominant position in the industry.
Financial Strength Breakdown
Netflix Inc's Financial Strength rating indicates a resilient balance sheet, capable of withstanding financial headwinds. The company's Interest Coverage ratio of 7.84 is a testament to its ability to comfortably meet interest obligations. Furthermore, an Altman Z-Score of 6.28 signals low risk of financial distress, and a Debt-to-Revenue ratio of 0.44 showcases Netflix Inc's strategic debt management.
Profitability Rank Breakdown
The Profitability Rank of Netflix Inc is exemplary, with an Operating Margin that has significantly increased over the past five years. The company's Gross Margin also reflects a consistent upward trend, indicating an enhanced ability to convert revenue into profit. Additionally, Netflix Inc's Predictability Rank of 5 stars signifies reliable operational performance.
Growth Rank Breakdown
Netflix Inc's high Growth Rank underscores its commitment to business expansion. The company's 3-Year Revenue Growth Rate of 16.2% outperforms 84.08% of its industry peers. The consistent increase in EBITDA over the past few years further highlights Netflix Inc's growth capabilities.
Conclusion: Netflix Inc's Position for Outperformance
Considering Netflix Inc's financial strength, profitability, and growth metrics, the GF Score highlights the firm's unparalleled position for potential outperformance. Investors seeking companies with similar robust financial health and growth prospects can explore more options using the GF Score Screen provided by GuruFocus. With its strong market presence and consistent performance, Netflix Inc stands as a compelling investment opportunity for those looking to capitalize on the digital streaming revolution.
This article, generated by GuruFocus, is designed to provide general insights and is not tailored financial advice. Our commentary is rooted in historical data and analyst projections, utilizing an impartial methodology, and is not intended to serve as specific investment guidance. It does not formulate a recommendation to purchase or divest any stock and does not consider individual investment objectives or financial circumstances. Our objective is to deliver long-term, fundamental data-driven analysis. Be aware that our analysis might not incorporate the most recent, price-sensitive company announcements or qualitative information. GuruFocus holds no position in the stocks mentioned herein.
