Highly Regarded

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

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

34% Premium TTM fundamentals · sector averages from covered peers

NFLX trades at 27.2× TTM earnings — a 34% premium to its Communication Services sector average of 20.3× in our coverage.

The Numbers

P/E (TTM)

27.2×

Sector avg: 20.3×

P/S (TTM)

6.4×

Sector avg: 5.4×

Market Cap

$291.03B

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 $68.93 27.2×
GOOGL $346.74 32.1×
META $645.98 27.5×
DIS $97.66 14.4×
T $21.80 7.2×

Is the Premium Justified?

July 12, 2026

Netflix Inc.'s trailing twelve-month (TTM) P/E of 29.0x represents a premium compared to the Communication Services sector average of 22.3x. This valuation is supported by the company's strong monetization efforts and expanding revenue streams beyond traditional subscriptions. Netflix reported robust first-quarter 2026 results, with revenues increasing 16.2% year-over-year, driven by membership growth, strategic pricing adjustments, and a significant acceleration in advertising revenue. The ad-supported tier has emerged as a key growth engine, now reaching over 250 million monthly active viewers globally, with projections for ad revenue to double to approximately $3 billion in 2026. Over 60% of new sign-ups in eligible markets are opting for this tier. While revenue growth is projected to moderate slightly in 2026, the market appears to be valuing Netflix's long-term monetization potential and market leadership, justifying the current premium.

Sources

Frequently Asked Questions

Is NFLX overvalued or undervalued?
On trailing-twelve-month earnings, NFLX trades at 27.2x versus a Communication Services sector average of 20.3x in our coverage — a 34.4% 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

GOOGL VZ META DIS T