NFLX – Market expectations are for Uniform ROA to fade, and management may have concerns about content creation, customer engagement, and advertising

May 24, 2022

  • Netflix, Inc. (NFLX) currently trades below corporate and historical averages relative to Uniform earnings, with a 13.0x Uniform P/E (Fwd. V/E’).
  • At these levels, markets are pricing in expectations for Uniform ROA to fade to 19%, accompanied by 9% Uniform asset growth.

  • Meanwhile, analysts expect Uniform ROA to only decline to 41% by 2023, accompanied by 14% Uniform asset growth.

  • If sustained going forward, these levels would imply a stock price closer to $479, representing significant potential equity upside for the firm.

  • That said, the firm’s most recent earnings call suggests management may have concerns about content creation, customer engagement, and advertising.

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