Highly Regarded

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

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

30% Premium TTM fundamentals · sector averages from covered peers

NFLX trades at 27.9× TTM earnings — a 30% premium to its Communication Services sector average of 21.5× in our coverage.

The Numbers

P/E (TTM)

27.9×

Sector avg: 21.5×

P/S (TTM)

6.6×

Sector avg: 5.7×

Market Cap

$298.21B

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 $70.63 27.9×
GOOGL $342.55 31.7×
META $711.70 30.3×
DIS $110.93 16.3×
T $23.62 7.8×

Is the Premium Justified?

October 4, 2026

Netflix's P/E multiple of 26.5x, a premium to the sector average of 22.5x, reflects investor confidence in its growth strategies. The company continues to invest heavily in content, with plans to spend $20 billion in 2026, expanding into live events and gaming to attract and retain subscribers. Its global subscriber base exceeded 325 million by late 2025, and the ad-supported tier now accounts for over 40% of new sign-ups, diversifying revenue streams. However, co-CEO Ted Sarandos noted a slowdown in engagement growth, with viewership up only 2% in the first half of 2026, and recent quarterly revenue growth rates have been the weakest in years, indicating potential pressures on future performance.

Sources

Frequently Asked Questions

Is NFLX overvalued or undervalued?
On trailing-twelve-month earnings, NFLX trades at 27.9x versus a Communication Services sector average of 21.5x in our coverage — a 29.7% 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

META VZ GOOGL T DIS