Highly Regarded

Is Netflix Inc. (NFLX) Stock Undervalued or Overvalued?

Trailing-twelve-month multiples vs Communication Services sector peers in our coverage

60% Premium TTM fundamentals · sector averages from covered peers

NFLX trades at 32.0× TTM earnings — a 60% premium to its Communication Services sector average of 20.0× in our coverage.

The Numbers

P/E (TTM)

32.0×

Sector avg: 20.0×

P/S (TTM)

7.6×

Sector avg: 5.2×

Market Cap

$342.16B

EPS (TTM): $2.53

Revenue (TTM)

$45.18B

Net income: $10.98B

Communication Services Peer Comparison

How NFLX's multiples stack up against sector peers we cover. Click any peer for its own valuation breakdown.

Stock Price P/E (TTM)
NFLX This page $81.04 32.0×
GOOGL $339.32 31.4×
META $572.18 24.4×
DIS $107.55 15.8×
T $25.89 8.5×

Is the Premium Justified?

August 30, 2026

Netflix's P/E multiple of 32.3x stands at a premium compared to the Communication Services sector average of 22.7x. This valuation reflects its established market leadership in streaming and ongoing efforts to diversify revenue streams. In Q2 2026, Netflix reported revenue of $12.56 billion, up 13% year-over-year, and diluted EPS of $0.80. While the company's Q3 revenue growth guidance of 11.7% and overall forward outlook were perceived as weaker than some investors expected, indicating a maturing growth rate, the expansion of its advertising tier is projected to double ad revenue in 2026 to approximately $3 billion. Continued investment in content and global subscriber engagement are key factors supporting its premium.

Sources

Frequently Asked Questions

Is NFLX overvalued or undervalued?
On trailing-twelve-month earnings, NFLX trades at 32.0x versus a Communication Services sector average of 20.0x in our coverage — a 60% premium. Whether that's justified depends on growth, margins, and risk; see the context above.
What does the P/E ratio tell you?
Price-to-earnings compares a company's share price with its per-share profits. A higher multiple means investors pay more per dollar of earnings — often for faster expected growth — while a lower one can signal slower growth or higher perceived risk.
Why compare against the sector average?
Valuation multiples vary structurally between industries — software typically trades richer than banks or energy. Comparing NFLX with its own Communication Services peers is more informative than comparing against the whole market.
Is a cheap stock automatically a good buy?
No. A discount can be justified by weak growth or elevated risk (a "value trap"), and a premium can be earned by quality and consistency. Valuation is one input — pair it with the fundamentals and the AI context on this page.

Methodology

Multiples are computed from trailing-twelve-month fundamentals (from company filings) and the latest share price: P/E is price ÷ diluted EPS, and P/S is market cap ÷ revenue. Sector averages use the Communication Services names in our 50-stock coverage with positive earnings — a deliberately like-for-like, if imperfect, benchmark.

Stocks with negative trailing earnings are compared on price-to-sales instead. Multiples update with prices and fundamentals; AI context refreshes weekly.

Not Financial Advice

This page is for education and information only. Indicators are mechanical calculations, AI commentary can contain errors, and nothing here is a recommendation to buy or sell any security. Do your own research and consider consulting a qualified financial advisor. See our full disclaimer.

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Same question, Communication Services peers

DIS GOOGL META VZ T