NETFLIX INC (NFLX) Stock Analysis
NETFLIX INC (NFLX) Stock Analysis
Analysis from 10-Q filed 2025-10-22. Data as of Q4 2025.
Overall Grade: F (Concerning)
NETFLIX INC faces challenges in financial performance that warrant careful analysis.
| Metric | Value | Context |
|---|---|---|
| ROIC | 28.8% | Above industry average |
| FCF Margin | 20.9% | Strong cash generation |
| Debt/Equity | 0.5x | Moderate leverage |
Investment Thesis: Strong return on invested capital of 28.8% suggests durable competitive advantages and efficient capital allocation.
Explore NETFLIX INC: Earnings History | Filing Intelligence | ROIC Analysis
Profitability: NETFLIX INC earns 28.8% ROIC, Top 5% in Consumer Discretionary
NETFLIX INC's trailing-twelve-month ROIC of 28.8% ranks Top 5% in Consumer Discretionary companies (sector median: 8.8%), driven by NOPAT margin of 25.5% combined with asset turnover of 0.8x. Source: 10-Q filed 2025-10-22. Gross margin of 48.5% with operating margin at 29.5% reflects strong pricing power.
| Metric | NFLX | Rating | Context |
|---|---|---|---|
| Return on Invested Capital (ROIC) | 28.8% | Excellent | Above sector median of 8.8% |
| Return on Equity (ROE) | 43.7% | Excellent | Efficient use of shareholder equity |
| Gross Margin | 48.5% | Good | Strong pricing power |
| Operating Margin | 29.5% | Excellent | Efficient operations |
Cash Flow: NETFLIX INC generates $9.5B FCF at 20.9% margin, positive NaN/8 quarters
NETFLIX INC generated $9.5B in free cash flow (TTM), a 20.9% FCF margin, a margin that ranks Top 5% in Consumer Discretionary. FCF was positive in N/A of the last 8 quarters. Source: 10-Q filed 2025-10-22.
| Metric | NFLX | Rating | Context |
|---|---|---|---|
| Free Cash Flow Margin | 20.9% | Excellent | Excellent cash conversion |
| Free Cash Flow (TTM) | $9.5B | Good | Positive cash generation |
| OCF/Net Income | 0.9x | Good | Potential accrual concerns |
| FCF Consistency (8Q) | N/A | Warning | Variable cash flow |
Balance Sheet: NETFLIX INC at 0.5x leverage
NETFLIX INC's debt-to-equity ratio of 0.5x reflects moderate leverage. Total debt of $14.5B offset by $28.7M in cash. Source: 10-Q filed 2025-10-22.
| Metric | NFLX | Rating | Context |
|---|---|---|---|
| Debt to Equity | 0.5x | Good | Moderate leverage |
| Net Cash Position | $-14.4B | Warning | Net debt position |
Valuation: NETFLIX INC trades at 36.5x earnings
NETFLIX INC trades at a P/E of 36.5x. Free cash flow yield of 2.4% reflects market expectations for growth.
| Metric | NFLX | Rating | Context |
|---|---|---|---|
| P/E Ratio | 36.5x | Adequate | Premium valuation |
| EV/Sales | 9.1x | Adequate | Growth premium priced in |
| FCF Yield | 2.4% | Adequate | Lower cash yield |
Capital Allocation: NETFLIX INC returns 2.3% shareholder yield
NETFLIX INC's total shareholder yield is 2.3% (dividends + buybacks 2.3%). Source: 10-Q filed 2025-10-22.
| Metric | NFLX | Rating | Context |
|---|---|---|---|
| Total Shareholder Yield | 2.3% | Adequate | Dividend + buyback yield combined |
| Buyback Yield | 2.3% | Adequate | Active share repurchases |
| Total Capital Returned (TTM) | $9.1B | Good | Dividends + buybacks returned to shareholders |
Sector Rankings
| Metric | Value | Percentile | vs Median |
|---|---|---|---|
| Return on Invested Capital (ROIC) | 28.8% | Top 5% | 3.3x above |
| Free Cash Flow Margin | 20.9% | Top 5% | 7.7x above |
| Gross Margin | 48.5% | Top 50% | 1.2x above |
| Operating Margin | 29.5% | Top 5% | 6.3x above |
| Return on Equity (ROE) | 43.7% | Top 25% | 4.1x above |
| P/E Ratio | 36.5x | N/A | - |
Financial Scorecard
| Metric | NFLX | Rating | Sector Context |
|---|---|---|---|
| Return on Invested Capital (ROIC) | 28.8% | Excellent | Top 5% of sector (median: 8.8%) |
| Free Cash Flow Margin | 20.9% | Excellent | Top 5% of sector (median: 2.7%) |
| Gross Margin | 48.5% | Good | Top 50% of sector (median: 39.5%) |
| Debt to Equity Ratio | 54.3% | Good | Moderate leverage |
| P/E Ratio (Price-to-Earnings) | 36.5x | Adequate | High expectations priced in |
| Free Cash Flow Yield | 2.4% | Warning | Growth-focused valuation |
Frequently Asked Questions
Q: What is NETFLIX INC's Return on Invested Capital (ROIC)?
NETFLIX INC (NFLX) has a trailing twelve-month Return on Invested Capital (ROIC) of 28.8%. This compares above the sector median of 8.8%. An ROIC above 20% indicates exceptional capital efficiency and strong competitive advantages.
Q: What is NETFLIX INC's Free Cash Flow Margin?
NETFLIX INC (NFLX) has a free cash flow margin of 20.9%, generating $9.5 billion in free cash flow over the trailing twelve months. A FCF margin above 20% indicates excellent cash conversion and a high-quality business model.
Q: Is NETFLIX INC stock overvalued or undervalued?
NETFLIX INC (NFLX) trades at a P/E ratio of 36.5x, which is above the sector median of N/A. The EV/Sales multiple is 9.1x. Free cash flow yield is 2.4%, reflecting growth expectations priced into the stock.
Q: How much debt does NETFLIX INC have?
NETFLIX INC (NFLX) has a debt-to-equity ratio of 0.5x with total debt of $14.5 billion. Net debt position is $14.4 billion.
Q: What is NETFLIX INC's revenue and earnings growth?
NETFLIX INC (NFLX) grew revenue by 15.9% year-over-year. Earnings per share increased by 27.8% compared to the prior year. Solid growth above 10% suggests healthy business momentum.
Q: Is NETFLIX INC buying back stock?
NETFLIX INC (NFLX) repurchased $9.1 billion of stock over the trailing twelve months. This represents a buyback yield of 2.3%.
Q: How does NETFLIX INC compare to competitors in Consumer Discretionary?
Compared to other companies in Consumer Discretionary, NETFLIX INC (NFLX) shows: ROIC of 28.8% is above the sector median of 8.8% (Top 4%). FCF margin of 20.9% exceeds the sector median of 2.7% (Top 0% of sector). Gross margin at 48.5% is 9 percentage points higher than sector peers. These rankings are based on MetricDuck's analysis of all Consumer Discretionary companies with available SEC filings.
Q: What warning signs should I watch for with NETFLIX INC?
NETFLIX INC (NFLX) shows no major financial warning signs based on current metrics. However, investors should always monitor: 1) Margin compression trends, 2) Cash flow consistency, 3) Debt levels relative to cash generation, and 4) Changes in competitive positioning.
Data Source: Data sourced from 10-Q filed 2025-10-22. TTM metrics as of Q4 2025.
Methodology: Financial metrics calculated from SEC 10-K and 10-Q filings using standardized formulas. Sector comparisons use peer group based on SIC code.
Scope: This analysis covers SEC filing fundamentals — profitability, cash flow, balance sheet, and valuation metrics. For analyst estimates and price targets, consult sell-side research.
This analysis is for informational purposes only and does not constitute investment advice.