Netflix Inc's (NASDAQ:NFLX) current Strong Buy recommendation, which was recently up graded from a Buy to is based on reasoning that considers a numerical calculation of risk/reward that is attractive, an analytical score that is above average, and a ranking in the company's industry group that is in the top decile, and a ranking in its sector group that is in the top quarter. NFLX derives some benefit of being in a sector that is ranked above average in investment attractiveness; however, its industry group is ranked below average in attractiveness which may counterweigh this to some extent. Portfolio Grader currently ranks NFLX as a Strong Buy. The methodology for fundamental and quantitative metrics used in this analytical tool evaluates and ranks nearly 5,000 stocks each week. NFLX has been upgraded from a Buy to a Strong Buy in the last week.
With a $108.1 billion market value, the company ranks in the top 25% of its industry group, Cable/Satellite TV, and in the top 10% of its sector group, Consumer Services, in market value. From the perspective of investment attractiveness, NFLX's current Portfolio Grader score places it 1 within the 12 companies in this industry group; in the top quartile of the sector with a ranking of 28 among the 255 companies in the sector of its Consumer Services sector, and number 386 in the nearly 5,000 company Portfolio Grader universe.
The Consumer Services sector is ranked number 7 among the 20 sectors in the Portfolio Grader universe putting it in the second quartile of all the GICS sectors. The Cable/Satellite TV industry group is ranked 95 among the 129 industry groups within the GICS sectors, placing it below-average in terms of the Proprietary Quantitative Score scoring system.
Within the Portfolio Grader stock ranking system Netflix has realized above-average scores in 5 of the 8 fundamental areas evaluated.
NFLX's operational scores are a source of strength with a ranking for sales growth, operating margin and earnings growth that are well above average. Scores for visibility of earnings are mixed, with a ranking for earnings revisions that is much better than the industry average but rankings for earnings surprises and earnings momentum worse than average. NFLX's score for return on equity is discernibly better than its industry group average but its ranking for cash flow is below-average. Based on these fundamental scores, Netflix places in the top half of the industry group.
Quantitatively, Portfolio Grader uses the Proprietary Quantitative Score to view NFLX's shares from the perspective of risk/reward. This exclusive scoring approach considers the relative value of the company's shares based on the recent $249.18 share price of the shares relative to its peers, the market and risk associated with its industry and sector groups. Using this risk/reward calculation, NFLX currently scores well above-average in its industry group compared to its peers.
The Proprietary Portfolio Grader stock ranking system assesses roughly 5,000 companies every week based on a number of fundamental and quantitative measures. Stocks are given a letter grade based on their results, with A being 'strong buy' and F being 'strong sell'. Explore the tool here.
Commentary provided by UpTick Data Technologies.
