Netflix Strong Margins Weak Stock What The Numbers Say

Key Tables We’ll Focus On

Out of all the tables, we’ll only use the ones that really matter for an actual buy/hold/sell decision:

• Valuation level & history: | 투자지표 (Valuation Multiple) | 현재값 (Current Value) | 동종업계 중앙값 (Peer Median) | 동종업계 평균 (Peer Mean) | 중앙값 대비 (vs. Median) | 평균 대비 (vs. Mean) | |---|---|---|---|---|---| | 후행 PER (Trailing P/E) | 24.8x | 16.6x (5 peers) | 89.6x | +49.4% vs median | -72.3% vs mean | | 선행 PER (Forward P/E) | 20.0x | 11.5x | -491.7x | +74.3% vs median | -104.1% vs mean | | PEG 비율 (PEG Ratio) | 1.6x | 9.5x | 43.6x | -83.7% vs median | -96.5% vs mean | | EV/EBITDA 배율 (EV/EBITDA) | 11.2x | 6.3x | -22.3x | +4.9x | +33.5x | | 주가매출비율 (P/S Ratio) | 7.4x | 1.5x | -0.5x | +5.9x | +7.9x | | 주가순자산비율 (P/B Ratio) | 12.6x | 1.8x | -184.8x | +10.8x | +197.4x |, | PER 참고 지표 (P/E Historical Context) | 값 (Value) | |---|---| | 1년 PER 범위 (1yr P/E Range) | 24.8x – 26.7x | | 1년 PER 중앙값 (1yr P/E Median) | 26.1x | | 역사적 백분위 순위 (Historical Percentile Rank) | 8th percentile |
• Growth and its quality (including buyback impact): **연간 성장률 vs 동종업계 (Annual Growth vs. Peers):** | 지표 (Metric) | 최근 전년대비 성장률 (Latest YoY Growth) | 직전 전년대비 성장률 (Prior YoY Growth) | 성장 추세 (Trend) | 동종업계 중앙값 (Peer Median) | |---|---|---|---|---| | 매출액 (Revenue) | +15.8% | +15.7% | accelerating ▲ | +3.4% | | 영업이익 (Operating Income) | +27.9% | +49.8% | decelerating ▼ | +51.5% | | 희석 주당순이익 (Diluted EPS) | +27.6% | +64.8% | decelerating ▼ | +56.9% |, **분기별 매출 & EPS 전년대비 성장률 (Quarterly Revenue & EPS YoY Growth):** | 분기 (Quarter) | 매출 전년대비 성장률 (Revenue YoY Growth %) | EPS 전년대비 성장률 (EPS YoY Growth %) | |---|---|---| | 2026-03-31 | +16.2% | +86.1% |, **자사주 매입 vs 유기적 EPS 성장 분해 (Buyback vs. Organic EPS Decomposition):** | 회계연도 (Fiscal Year) | EPS 성장률 (EPS Growth %) | 유기적 순이익 성장률 (Organic NI Growth %) | 자사주 매입 기여분 (Buyback Contribution %) | 추정 발행주식수 (Implied Shares) | |---|---|---|---|---| | 2025 | +27.6% | +26.1% | +1.2% | 4.340B | | 2024 | +64.8% | +61.1% | +2.3% | 4.393B | | 2023 | +20.9% | +20.4% | +0.4% | 4.495B | | 2022 | — | — | — | 4.514B |
• Margin level and trend: | 마진 종류 (Margin Type) | 최근값 (Latest) | 전년값 (Prior Year) | 방향 (Direction) | 5년 범위 (5yr Historical Range) | 동종업계 중앙값 (Peer Median) | 동종업계 대비 차이 (Gap vs. Peers, pp) | |---|---|---|---|---|---|---| | 매출총이익 마진 (Gross Margin) | +48.5% | +46.1% | expanding ▲ | +39.4% – +48.5% (+9.1% spread) | +44.0% | +4.5pp | | 영업이익 마진 (Operating Margin) | +29.5% | +26.7% | expanding ▲ | +17.8% – +29.5% (+11.7% spread) | +4.9% | +24.6pp |, **연간 마진 이력 (Annual Margin History):** | 회계연도 (Fiscal Year) | 매출총이익률 (Gross Margin %) | 동종업계 중앙값 (Peer Median) | 동종업계 평균 (Peer Mean) | 영업이익률 (Operating Margin %) | 동종업계 중앙값 (Peer Median) | 동종업계 평균 (Peer Mean) | |---|---|---|---|---|---|---| | 2025 | +48.5% | +44.0% | +43.1% | +29.5% | +4.9% | +8.7% | | 2024 | +46.1% | +35.6% | +35.6% | +26.7% | +2.0% | +2.4% | | 2023 | +41.5% | +32.5% | +35.0% | +20.6% | +1.7% | +3.4% | | 2022 | +39.4% | +36.9% | +42.8% | +17.8% | +6.8% | +12.8% |, **분기별 마진 (Quarterly Margins):** | 분기 (Quarter) | 매출총이익률 (Gross Margin %) | 전분기 대비 (QoQ) | 영업이익률 (Operating Margin %) | 전분기 대비 (QoQ) | |---|---|---|---|---| | 2026-03-31 | +51.9% | ▲ | +32.3% | ▲ | | 2025-12-31 | +45.9% | ▼ | +24.5% | ▼ | | 2025-09-30 | +46.4% | ▼ | +28.2% | ▼ | | 2025-06-30 | +51.9% | ▲ | +34.1% | ▲ | | 2025-03-31 | +50.1% | — | +31.7% | — |
• Cash flow & balance sheet: | 회계연도 (Fiscal Year) | 잉여현금흐름 (Free Cash Flow, $B) | 순이익 (Net Income, $B) | FCF 전환율 (FCF Conversion Ratio) | FCF 마진율 (FCF Margin %) | 설비투자 집중도 (CapEx Intensity %) | |---|---|---|---|---|---| | 2025 | $9.46B | $10.98B | 0.86x | +20.9% | +1.5% | | 2024 | $6.92B | $8.71B | 0.79x | +17.7% | +1.1% | | 2023 | $6.93B | $5.41B | 1.28x | +20.5% | +1.0% | | 2022 | $1.62B | $4.49B | 0.36x | +5.1% | +1.3% |, **자본 배분 현황 (Capital Allocation, FY2025), FCF 대비 비율:** | FCF 사용 목적 (Use of Free Cash Flow) | FCF 대비 비율 (% of FCF) | |---|---| | 자사주 매입 (Buybacks) | 96.5% | | 부채 상환 (Debt Repayment) | 19.4% |, **최근 회계연도 vs 동종업계 (Latest Year vs. Peers):** | 지표 (Metric) | 해당 종목 (This Company) | 동종업계 중앙값 (Peer Median) | 동종업계 평균 (Peer Mean) | |---|---|---|---| | FCF 전환율 (FCF Conversion Ratio) | 0.86x | 1.32x | 2.02x | | FCF 마진율 (FCF Margin %) | +20.9% | +10.7% | +11.9% | | 설비투자 집중도 (CapEx Intensity %) | +1.5% | +2.7% | +3.4% | | FCF 수익률 (FCF Yield %) | +2.8% | +6.8% | — |, **재무 건전성 (Balance Sheet Health):** | 회계연도 (Fiscal Year) | 순부채 (Net Debt, $B) | 순부채/EBITDA 배율 (Net Debt / EBITDA) | 이자보상배율 (Interest Coverage Ratio) | |---|---|---|---| | 2025 | $5.43B | 0.18x | 17.2x | | 2024 | $7.78B | 0.30x | 14.5x | | 2023 | $7.43B | 0.35x | 9.3x | | 2022 | $9.21B | 0.45x | 8.0x | | 동종업계 중앙값 (Peer Median) | — | 0.56x | 4.1x |
• Share price performance & alpha: | 기간 (Period) | 해당 종목 수익률 (Stock Return %) | S&P 500 수익률 (SPY Return %) | 동종업계 수익률 (Sector Return %) | S&P 500 대비 초과수익 (vs. SPY, pp) | 동종업계 대비 초과수익 (vs. Sector, pp) | |---|---|---|---|---|---| | 1mo | -14.2% | +1.1% | -5.3% | -15.2% | -8.8% | | 3mo | -19.2% | +11.9% | +0.4% | -31.0% | -19.6% | | 6mo | -17.0% | +8.9% | -10.3% | -25.9% | -6.7% | | 1yr | -37.0% | +26.0% | +20.2% | -63.0% | -57.1% |, ` 수익률 분해 분석 — OLS 회귀 (Return Decomposition, OLS Regression, Full Price History): | 분석 지표 (Regression Metric) | 값 (Value) | |---|---| | 시장 베타 (Market Beta, β_SPY) | 0.31x | | 업종 베타 (Sector Beta, β_sector) | 0.10x | | 연환산 초과수익률 (Annualised Alpha) | -43.3% | | 설명력 R² (R², Market + Sector) | 0.025 | | 회귀 기간 거래일수 (Trading Days in Regression) | 274 |

초과수익률 해석 (Alpha Interpretation): 시장 전체 및 업종 효과를 제거한 연환산 잔여 수익률입니다. 양수(+)이면 기업 고유 경쟁력으로 시장을 초과하고 있음을 의미합니다. (Annualised residual return after stripping out market-wide and sector effects. Positive = company outperforms on its own merits.) `

• Analyst expectations & revisions: | 종목 (Ticker) | 올해 EPS 예상 (FY0 EPS Est.) | 내년 EPS 예상 (FY+1 EPS Est.) | 올해 EPS 성장률 (FY0 Growth %) | 내년 EPS 성장률 (FY+1 Growth %) | 커버 애널리스트 수 (# Analysts) | 30일 추정치 변화율 (30d Drift %) | 상향/하향 수정 수 (Revisions ↑/↓) | |---|---|---|---|---|---|---|---| | NFLX ◀ | $3.59 | $3.83 | +0.4% | +0.1% | 39 | +0.0% | 0↑ / 1↓ | | DIS | $6.83 | $7.50 | +0.1% | +0.1% | 26 | +0.4% | 25↑ / 0↓ | | WBD | $-1.25 | $0.01 | -5.3% | +1.0% | 14 | — | 0↑ / 11↓ | | PSKY | $0.64 | $0.87 | +0.2% | +0.4% | 18 | -14.7% | 2↑ / 14↓ | | FOXA | $4.99 | $5.74 | +0.0% | +0.1% | 17 | +0.4% | 16↑ / 0↓ |

These tables together tell three big stories:

1. Netflix still trades at a premium vs peers, but at a discount vs its own recent history.
2. Margins, free cash flow, and balance sheet quality are top-tier within the sector.
3. The business looks strong, but the stock has badly lagged and analyst expectations are flat.

Let’s unpack what each set of numbers really means.

---

1. Premium valuation, but cheap vs its own history

The first question any investor asks is: “Is this stock expensive or cheap?”

The go-to metric is the P/E ratio (price-to-earnings). It tells you how many years of current earnings are embedded in today’s price. A P/E of 20x loosely means you’re paying 20 years’ worth of current earnings.

From the table, Netflix’s trailing P/E around 24.8x and forward P/E around 20x are clearly higher than the peer median. In plain English: for each $1 of earnings, investors are willing to pay more for Netflix than for the average streaming/media stock. That premium reflects confidence in Netflix’s brand, global scale, and margin profile.

But P/E alone can mislead if you ignore growth. That’s where the PEG ratio comes in: P/E divided by earnings growth. Many investors view a PEG around 1x as a rough “growth-adjusted fair value.” Netflix’s PEG around 1.6x is far below the peer median PEG (which is very high), suggesting that once you factor in growth, Netflix doesn’t look nearly as expensive as the raw P/E suggests.

Other multiples (EV/EBITDA, P/S, P/B) also sit well above peers, reinforcing that Netflix is still a premium stock within its industry.

Now, how does today’s valuation compare with Netflix’s own recent past?

The P/E history tells you:

• 1-year P/E range: about 24.8x – 26.7x
• 1-year P/E median: 26.1x
• Current P/E sits around the 8th percentile of that 1-year range

“8th percentile” means: over the past year, Netflix has rarely been this cheap on P/E. So:

• Versus peers, Netflix is still a premium name.
• Versus its own past 12 months, the valuation has de-rated to the low end of its range.

For beginners, the key lesson is:

• Always compare valuation horizontally (vs peers) and vertically (vs its own history).
• Netflix remains a premium business, but that premium has already compressed a lot.

What to watch going forward

• For the P/E to expand again, the market needs renewed confidence in sustained growth and high margins.
• If growth slows or competitive fears rise, the P/E could compress further toward peer levels.

---

2. Growth: slower than last year’s boom, but still well ahead of peers

Growth has two main dimensions:

1. Revenue growth – how fast the business is getting bigger.
2. Earnings/EPS growth – how fast shareholder profit per share is rising.

연간 성장률 vs 동종업계 (Annual Growth vs. Peers):

On an annual basis:

• Revenue growth is around mid-teens, versus a peer median in the low single digits.
• Operating income and EPS growth have slowed from last year’s explosive +50–60% pace to high-20% growth.

So yes, growth has decelerated from a very strong year. But it’s important to see that Netflix is still growing materially faster than most peers. Part of the slowdown is simply cycling off a year with unusually strong recovery and margin expansion.

Quarterly data gives more nuance.

분기별 매출 & EPS 전년대비 성장률 (Quarterly Revenue & EPS YoY Growth):

• In Q1 2026, revenue grew about +16% YoY.
• EPS, however, jumped roughly +86% YoY.

This gap tells you that earnings are growing far faster than sales, thanks to:

• Margin expansion (better cost efficiency, pricing, and mix)
• Operating leverage (more profit from each dollar of revenue)

But is this EPS growth “real,” or just a financial illusion from share buybacks? That’s where the EPS decomposition helps.

자사주 매입 vs 유기적 EPS 성장 분해 (Buyback vs. Organic EPS Decomposition):

Looking at the breakdown:

• In 2025, EPS growth of about +27.6% came almost entirely from organic net income growth (~26%), with only a small 1–2 percentage point boost from buybacks.
• 2024 shows a similar pattern: buybacks help, but most of the EPS growth is driven by higher profits, not shrinking share count.

For a new investor, this is crucial: Netflix’s EPS growth is fundamentally earnings-driven, not buyback-engineered. Buybacks are additive, not the main story.

What to watch going forward

• Can Netflix maintain double-digit revenue growth as the core subscriber base matures?
• Will EPS continue to grow faster than revenue thanks to further margin improvement and operating leverage, or will that gap narrow?

---

3. Margins: elite level, and still improving

Margins tell you how much profit a company keeps from each dollar of sales.

• Gross margin: revenue minus direct costs (like content costs) as a % of revenue.
• Operating margin: profit after all operating expenses (salaries, marketing, overhead) as a % of revenue.

Higher margins mean the company squeezes more profit out of its revenue base.

The latest numbers show:

• Gross margin around 48.5%, a few points above the peer median.
• Operating margin around 29.5%, versus a peer median below 5% — a huge gap of more than 24 percentage points.
• Both margins are up YoY.

In a sector where many players struggle to hit mid-single-digit operating margins, Netflix operating near 30% is remarkable. It reflects a scalable global subscription platform and disciplined cost management.

The multi-year margin history reinforces that this isn’t a one-off.

연간 마진 이력 (Annual Margin History):

From 2022 to 2025:

• Gross margin climbed from about 39% to the high-40s.
• Operating margin rose from roughly 18% to nearly 30%.
• Meanwhile, peer medians have mostly stagnated or even dipped in some years.

Quarterly data shows some short-term noise but a clear upward trend.

분기별 마진 (Quarterly Margins):

• Margins dipped in a couple of 2025 quarters but
• Rebounded in Q1 2026 to roughly 52% gross and 32% operating, near all-time highs.

For beginners, the key insight is:

• High and rising margins mean each dollar of revenue is becoming more valuable to shareholders.
• In content-heavy industries, where costs can easily spiral, Netflix’s progress is especially impressive.

What to watch going forward

• Whether gross and operating margins can hold around 25–30%+ even as Netflix invests in new content formats, advertising, and possibly more expensive rights.
• If revenue growth slows but margins stay high, the stock can still be supported; if both slow and margins compress, the valuation case weakens.

---

4. Cash flow & balance sheet: a strong cash engine with modest leverage

4.1 Free cash flow: the company’s “take-home pay”

Free cash flow (FCF) is the cash left after a company pays all operating expenses and the capital spending needed to run the business. For an individual, it’s like what’s left in your bank account after taxes and bills: your true “take-home pay.”

The trend here is striking:

• FCF has climbed from about $1.6B in 2022 to around $6.9B–$9.5B in recent years.
• FCF margin improved from roughly 5% to around 20%.
• FCF conversion (FCF vs net income) has fluctuated but is generally in the 0.8–1.3x range, indicating that accounting earnings largely translate into real cash.

This is particularly important in media/streaming, where accounting treatment of content can make earnings look better than cash. Netflix’s recent numbers show strong cash backing for its profits.

최근 회계연도 vs 동종업계 (Latest Year vs. Peers):

Versus peers:

• FCF margin around 20.9% is about 2x the peer median.
• CapEx intensity is lower than peers, suggesting a lighter capital footprint relative to revenue.
• However, FCF conversion and FCF yield (FCF divided by market cap) aren’t dramatically higher than peers, hinting that investors have been willing to pay up for this quality.

4.2 What is Netflix doing with all that cash?

자본 배분 현황 (Capital Allocation, FY2025), FCF 대비 비율:

The capital allocation table shows:

• The vast majority of FCF (around 96%) is going to share buybacks.
• A smaller but meaningful chunk is used for debt repayment.

Combined with the EPS decomposition we saw earlier, this tells us:

• Netflix is now firmly in the “cash-returning” phase of its life cycle.
• EPS growth is still mostly driven by real earnings, but buybacks are a tangible extra return lever for shareholders.

4.3 Balance sheet: leverage risk looks modest

재무 건전성 (Balance Sheet Health):

On leverage and interest coverage:

• Net debt/EBITDA is well below the peer median, sliding from around 0.45x down toward 0.18x.
• Interest coverage is very healthy (mid-teens x), versus a peer median around 4x.

So Netflix has transitioned from a “borrow heavily to grow” profile to a more conservative, cash-generative profile. That reduces vulnerability to shocks from the macro environment, rates, or ad cycles.

What to watch going forward

• Whether FCF margins remain firmly in double digits.
• The balance between growth investments vs cash returns (buybacks/dividends vs content and new initiatives).
• Any signs of leverage creeping up again to fund large content or M&A bets.

---

5. Why has the stock performed so poorly? The classic “great business, bad stock” setup

On the fundamental side, Netflix looks strong. But stock returns tell a very different story.

Across time horizons:

• Over 1 year, Netflix has returned about -37%.
• Over the same period, the S&P 500 is up roughly +26%, and the sector is up around +20%.
• That’s roughly -63 percentage points of underperformance vs the S&P 500.

And it’s not just a 1-year blip: short-term (1–3 months) and medium-term (6 months) returns also show significant underperformance.

To separate broad market moves from company-specific issues, we look at the regression (beta/alpha) table.

수익률 분해 분석 — OLS 회귀 (Return Decomposition, OLS Regression, Full Price History):

초과수익률 해석 (Alpha Interpretation): 시장 전체 및 업종 효과를 제거한 연환산 잔여 수익률입니다. 양수(+)이면 기업 고유 경쟁력으로 시장을 초과하고 있음을 의미합니다. (Annualised residual return after stripping out market-wide and sector effects. Positive = company outperforms on its own merits.)

• Market beta is around 0.31, sector beta about 0.10 — Netflix doesn’t move in close lockstep with the index or its sector.
• Annualised alpha is about -40%+, meaning that after removing market and sector effects, the residual performance is deeply negative.
• A low R² means these moves are not well explained by the market or sector alone, implying strong idiosyncratic (company-specific) disappointment.

The lesson for beginners:

• A great business can still be a bad investment if expectations and valuation were too high going in.
• The recent underperformance likely reflects a major reset in investor expectations about Netflix’s long-term growth and profitability trajectory, even though current numbers look solid.

What to watch going forward

• How the stock reacts to earnings: do good results finally get rewarded, or does the market keep “selling the news”? That tells you whether the expectation reset is done.
• Whether narrative shifts (e.g., advertising traction, new revenue lines, or strong content slates) can rebuild confidence.

---

6. Analyst expectations: growth story intact, but excitement is gone

Analyst EPS estimates and revision momentum give you a sense of what the professional crowd is expecting.

For Netflix:

• This year’s and next year’s EPS growth estimates are only slightly positive, with very small percentage changes.
• Over the last 30 days, there has been virtually no estimate drift and almost no meaningful upward revisions.

By contrast, some peers show more active upward revisions or clearer momentum in estimates.

This suggests that, in the eyes of analysts:

• Netflix is no longer viewed as a hyper-growth story, but as a maturing, steady grower.
• To justify multiple expansion, Netflix may need to surprise to the upside on subscribers, ad revenue, or margins.

What to watch going forward

• Whether earnings beats translate into upward revisions in forward EPS estimates, not just one-off upside.
• How Netflix’s expected growth compares to peers over time; if it begins to re-accelerate relative to peers, sentiment could turn.

---

Bottom Line

Bringing everything together, here’s how the Netflix investment case looks through the lens of these tables.

Bull Case

• Top-tier margins and strong FCF (around 20% margin) plus mid-teens revenue growth make for a very high-quality business.
• Balance sheet risk appears low, with modest net leverage and strong interest coverage.
• After a sharp year of underperformance, Netflix now trades near the low end of its own recent P/E range, potentially offering a more attractive entry for long-term investors who believe in the story.

Bear Case

• Global streaming penetration is high, so subscriber growth and ARPU may slow, pulling revenue growth into the single digits.
• Competitive and content cost pressures could erode the hard-won 25–30% operating margins.
• If investors increasingly see Netflix as a mature media company rather than a growth stock, further multiple compression toward sector averages is possible, even if earnings keep growing.

One Key Question to Monitor

“Over the next 3–5 years, can Netflix sustain double-digit revenue growth while keeping operating margins in the 25–30%+ range?”

If your honest answer is “yes,” today’s reset in expectations and valuation might represent a compelling long-term opportunity. If your answer is “no,” even the current de-rated multiple could still prove expensive.

The most practical habit is to revisit these same tables each quarter and ask: “Has anything changed that would make me answer that question differently?” That’s how you turn raw numbers into real investment decisions.