Netflix (NFLX:NAS) Fundamental Valuation Report


Fundamental Valuation Report

Netflix(NFLX:NAS)

Consumer Cyclical:Media-Diversified

This Report was generated using the valuation tools available on StockCalc.com. For a free 30 day trial click here.

Close Price/Date
$344.71 (USD) 07/02/2019

Weighted Valuation
$342.94 (USD)

Overall Rating
Fairly valued to slightly Overvalued by 0.5%

Valuation Models Analyst Consensus: $398.10 (USD)
(in order of importance) Adjusted Book Value: $260.19 (USD)
Valuation Methods This company is:
Cash Flow: Overvalued on a Cash Flow Valuation
Comparable Company: Overvalued on a Comparable Valuation
Asset: Overvalued on an Asset Valuation

Company Overview (NFLX:NAS USD)

Price 344.71
Range 339.02 – 348.75
52 week 233.88 – 418.97
Open 347.90
Vol / Avg. 7.81M/12.79M
Mkt cap 150.5B
P/E 128.62
Div/yield 0.00/0.00
EPS 2.68
Shares 436.6M
Beta 1.39

Company Description

Netflix’s primary business is a streaming video on demand service now available in almost every country worldwide except China. Netflix delivers original and third-party digital video content to PCs, Internet-connected TVs, and consumer electronic devices, including tablets, video game consoles, Apple TV, Roku, and Chromecast. In 2011, Netflix introduced DVD-only plans and separated the combined streaming and DVD plans, making it necessary for subscribers who want both to have separate plans.

Valuation Details

 We have up to 6 valuation points for each company. Details are at the bottom of the report.

Discounted Cash Flow and Sensitivity Analysis for NFLX:NAS

Using a discounted cash flow model we generated an intrinsic value of $140.99 (USD) for NFLX:NAS

Sensitivity Analysis

(showing how changes in the input variables impact the DCF calculation)

NFLX:NAS Current Values Valuation If Dropped * Valuation If Raised *
Calculated Value: $140.99 1% 5% 1% 5%
WACC (or Ke) 12.91 $158.31 $126.87
Terminal Growth Rate 3.00 $129.31 $155.30
Tax Rate 0.01 $147.11 $134.91
Cash Flow 6,260,958,000 $134.89 $147.10
Capital Expenditures -123,175,000 $140.89 $141.09
Long Term Debt 2,373,966,000 $141.26 $140.72

* Changes are absolute: ex WACC from 8% to 7%

Comparables Model

Using similar companies and price based ratios we generated a valuation of $0.00 (USD) for NFLX:NAS. We also generated a valuation of $200.91 (USD) using other metrics and comparables.
The comparable companies were Walt Disney (DIS:NYS) and Twenty-First Century Fox (FOXA:NAS).

Company NFLX:NAS End Date Value
Earnings/Share $2.68 (USD)
Book Value/Share $0.00 (USD)
Sales/Share $0.00 (USD)
Cash Flow/Share $0.00 (USD)
EBITDA/Share $3.83 (USD)
Price Based on Comps Adjustment Factor (%)
$0.00 (USD) 0.0
$0.00 (USD) 0.0
$0.00 (USD) 56.9
($22.96) (USD) 0.0
$0.00 (USD) 0.0
NFLX:NAS Ratios Used Average Values DIS:NYS FOXA:NAS
0.00 PE Ratio 15.97 13.34 18.61
0.00 PB Ratio 3.92 3.41 4.42
0.00 PS Ratio 2.91 2.83 3.00
0.00 PCF Ratio 17.17 11.76 22.59
0.00 EV to EBITDA 13.01 9.93 16.09

Multiples

Using a multiples approach we generated a valuation of  $524.22 (USD) for NFLX:NAS

Company NFLX:NAS End Date Value
Earnings/Share $2.68 (USD)
Book Value/Share $0.00 (USD)
Sales/Share $0.00 (USD)
Cash Flow/Share $0.00 (USD)
EBITDA/Share $3.83 (USD)
Price Based on Comps Adjustment Factor
$608.99 (USD) 0
$0.00 (USD) 0
$0.00 (USD) 0
$0.00 (USD) 0
$439.45 (USD) 0
Ratios Ratio Average
PE Ratio 227.23
PB Ratio 21.79
PS Ratio 7.11
PCF Ratio 216.75
EV to EBITDA 114.62

Adjusted Book Value versus Historical Price to Book

The average the Price to Book ratio for  NFLX:NAS for the last 10 years was  21.68

We ran the Adjusted Book Value for  NFLX:NAS and generated a book value of  $12.00 (USD)
By multiplying these we get an adjusted valuation of  $260.19 (USD)

Analyst Data

In the Stockcalc database there are 10 analysts that provide a valuation for NFLX:NAS. The 10 analysts have a concensus valuation for NFLX:NAS for 2019 of $398.10 (USD).

NFLX:NAS Netflix

Analyst Recommendation
Buy Hold Sell Rating
(of 5)
Guidance As Of
7 3 2 3.8333 Outperform 2019-2-6

Current Price: 344.71 USD

Analyst Consensus
USD Millions 2019 2020 2021
Mean EPS 4.22 6.37 9.98
# EPS Analysts 11 9 6
Mean Revenue 20,275.00 24,884.50 29,640.90
# Revenue Analysts 9 8 6
Mean Target Price 398.10
Mean Cash Flow -3.85 -0.94 3.26
Mean EBITDA 2,869.60 4,018.10 6,078.60
Mean Net Income 1,936.20 2,956.30 4,576.60
Mean Debt Outstanding 9,461.10 11,051.00 11,540.70
Mean Tax Rate 12.82 13.78 15.00
Mean Growth Rate 28.17
Mean Capital Expenditure 232.80 286.70 314.80

Explanation of Valuation Models

We have up to 6 valuation points for each company in the database.

The Discounted Cash Flow (DCF) valuation is a cash flow model where cash flow projections are discounted back to the present to calculate value per share. DCF is a common valuation technique especially for companies undergoing irregular cash flows such as resource companies (mining, forestry, oil and gas) going though price cycles or smaller companies about to generate cash flow (junior exploration companies, junior pharma, technology firms…).

The Price Comparables valuation is the result of valuing the company we are looking at on the basis of ratios from selected comparable companies: Price to Earnings, Price to Book, Price to Sales, Price to Cash Flow, Enterprise Value (EV) to EBITDA. Each of these ratios for the selected comparable companies are averaged and multiplied by the values for the company we are interested in to calculate a value per share for our selected company.

We have included the Other Comparables as a way to value companies that cannot be valued using Earnings based ratios. This technique is very useful for companies still experiencing negative cash flows such as mining exploration firms. We use Cash/Share, Book Value/Share, MarketCap, 1 Year Return, NetPPE as the ratios here. Each of these ratios for the selected comparable companies are averaged and multiplied by the values for the company we are interested in to calculate a value per share for our selected company.

Multiples are similar to Price comparables where we look at current or historic ratios for the company in question to assess what it should be worth today based on those historic ratios. We use the same 5 ratios as in the price comparables and value the company with its historic averages.

With Adjusted Book Value (ABV) we calculate the book value per share for the company based on its balance sheet and multiply that book value per share by its historical price to book ratio to calculate a value per share.

If we have Analyst coverage for the company we use the consensus target price here.

Notice to User


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