Why Netflix Stock May Be a Buy Right Now

Netflix (NFLX), the world's largest streaming service, announced quarterly earnings yesterday afternoon, and though the stock is selling off, the results were broadly positive. After declining more than 30% over the last few months and further today, Netflix shares are approaching levels levels that are beginning to look quite attractive.The streaming giant beat expectations modestly, with EPS of $0.56 vs. ~$0.55 expected and revenue of about $12.05 billion, slightly above forecasts. Subscriber growth remained solid, topping ~325 million paid members globally. Despite the beat, shares are down a little more than 4% as investors focused on softer Q1 guidance (EPS and margin outlook below consensus) and concerns around costs tied to its Warner Bros. Discovery acquisition efforts. Management forecast full-year 2026 revenue of roughly $50.7 billion–$51.7 billion with expanding ad revenue.Netflix has been a tremendously profitable stock for shareholders and over the last ten years has compounded at an extremely impressive 23.4% annually, driven by its steady and high growth in sales and earnings over that time.Image Source: Zacks Investment ResearchWhy Netflix Shares are so AppealingNetflix remains the clear leader in streaming, with a scale, data advantage, and content engine that few competitors can match. Consensus expectations call for revenue growth in the low double digits over both this year and next, while earnings are projected to grow in the low-to-mid 20% range over the same period. That combination of durable top line expansion and accelerating profitability places Netflix in a relatively small group of large-cap companies still capable of delivering such growth.From a valuation standpoint, the stock looks increasingly reasonable. Netflix is currently trading at roughly 27.2x forward earnings, which is not inexpensive in absolute terms, but represents a meaningful discount to its five-year median multiple of 37.1x. For a business with strong growth, pricing power and global reach that valuation gap suggests the market is pricing in a more cautious outlook than fundamentals alone would justify.Image Source: Zacks Investment ResearchCan NFLX Stock Reach Management’s Lofty Goals?Looking longer term, management has articulated an ambitious but credible growth vision. Netflix is targeting a doubling of revenue by 2030 and has openly discussed the hope to reach a $1 trillion market capitalization over time. That roadmap is supported by a diversified growth strategy that extends well beyond traditional scripted content. International programming continues to scale efficiently, live events are expanding engagement and monetization opportunities, and newer initiatives such as gaming and advertising add incremental revenue streams.With a current market capitalization of $370 billion, achieving those longer-term goals would require sustained execution rather than heroic assumptions. Given Netflix’s track record, that outcome appears increasingly plausible. In that context, recent weakness in the shares looks less like a warning signal and more like an opportunity to gain exposure to a high-quality compounder at a more reasonable valuation.Zacks' Research Chief Picks Stock Most Likely to "At Least Double"Our experts have revealed their Top 5 recommendations with money-doubling potential – and Director of Research Sheraz Mian believes one is superior to the others. Of course, all our picks aren’t winners but this one could far surpass earlier recommendations like Hims & Hers Health, which shot up +209%.See Our Top Stock to Double (Plus 4 Runners Up) >>Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report Netflix, Inc. (NFLX): Free Stock Analysis ReportThis article originally published on Zacks Investment Research (zacks.com).Zacks Investment ResearchWeiter zum vollständigen Artikel bei Zacks Weiter zum vollständigen Artikel bei Zacks