Netflix Inc. (NFLX, Financial), a leading player in the diversified media industry, is currently trading at $425.62 with a market cap of $188.61 billion. The company's stock price has seen a gain of 3.01% today, despite a slight loss of -1.19% over the past four weeks. In this article, we will delve into the company's GF Score and its implications for the company's future performance potential.
Netflix's Stellar GF Score
Netflix boasts a GF Score of 96 out of 100, placing it in the highest outperformance potential category. The GF Score is a stock performance ranking system developed by GuruFocus, which has been found to be closely correlated to the long-term performances of stocks. The score takes into account five key aspects: Financial Strength, Profitability Rank, Growth Rank, GF Value Rank, and Momentum Rank. A high GF Score, like Netflix's, generally indicates higher returns.
Financial Strength Analysis
Netflix's Financial Strength Rank stands at 7 out of 10. This rank measures the company's financial situation based on its debt burden, debt to revenue ratio, and Altman Z-Score. Netflix's interest coverage is 7.37, indicating a healthy ability to cover its interest expenses. Its debt to revenue ratio is 0.53, and its Altman Z score is 5.54, both of which suggest a strong financial position.
Profitability Rank Analysis
The company's Profitability Rank is a perfect 10 out of 10. This rank is based on factors such as operating margin, Piotroski F-Score, trend of the operating margin, consistency of profitability, and Predictability Rank. Netflix's operating margin stands at 17.51%, and its Piotroski F-Score is 4. The company has shown consistent profitability over the past 10 years, with an uptrend in its operating margin (5-year average) at 22.40%.
Growth Rank Analysis
Netflix also scores a perfect 10 out of 10 on the Growth Rank, which measures the growth of a company in terms of its revenue and profitability. The company's 5-year revenue growth rate is 22.10%, and its 3-year revenue growth rate is 16.20%. Its 5-year EBITDA growth rate is an impressive 24.20%, indicating robust growth.
GF Value Rank Analysis
The company's GF Value Rank is 6 out of 10. This rank is determined by the price-to-GF-Value ratio, a proprietary metric calculated based on historical multiples along with an adjustment factor based on a company's past returns and growth and future estimates of the business' performance.
Momentum Rank Analysis
Netflix's Momentum Rank is 6 out of 10. This rank is determined using the standardized momentum ratio and other momentum indicators, suggesting a positive momentum for the company's stock price performance.
Competitor Analysis
When compared to its main competitors, Netflix holds a strong position. The Walt Disney Co (DIS) has a GF Score of 79, Warner Bros. Discovery Inc (WBD) scores 89, and Live Nation Entertainment Inc (LYV) has a GF Score of 65. These scores indicate that Netflix is outperforming its competitors in terms of GF Score.
In conclusion, Netflix's high GF Score, strong financial strength, impressive profitability, robust growth, and positive momentum suggest a promising future for the company. However, investors should always consider all aspects of a company's performance and market conditions before making investment decisions.
