• Wondering whether Netflix at around US$91 per share is a bargain or just fairly priced? This breakdown focuses squarely on what you are getting for the price you pay.
• The stock has seen a 1.4% decline over the past week and a 7.7% decline over the last 30 days, with a 20.0% decline over the past year set against a 174.0% return over three years and 83.8% over five years.
• Recent attention on Netflix has centered on its position as a major streaming platform and how investors weigh long term prospects against current subscription trends. Broader conversations about competition, content spending and user growth expectations are also feeding into how the stock is being priced today.
• Netflix currently holds a valuation score of 3 out of 6, which means it screens as undervalued on half of Simply Wall St's checks. The following sections walk through those different valuation approaches and then outline a way to tie them together into a clearer view of what the stock might be worth.

Approach 1: Netflix Discounted Cash Flow (DCF) Analysis

A Discounted Cash Flow, or DCF, model estimates what a stock could be worth by projecting the cash the company may generate in the future and then discounting those amounts back to today.

For Netflix, the model used is a 2 Stage Free Cash Flow to Equity approach. The latest twelve month free cash flow sits at about $12.0b. Analyst and extrapolated projections used in this model run through to 2035. Netflix’s projected free cash flow in 2030 is $22.7b, and the discounted value of that 2030 cash flow is $14.8b. All figures here are in US dollars.

Bringing all projected and discounted cash flows together, the DCF model suggests an intrinsic value of about $90.23 per share. Compared with the recent share price around $91, this points to the stock trading roughly 0.9% above the model’s estimate, which falls within a reasonable margin of error.

Result: ABOUT RIGHT

Netflix is fairly valued according to our Discounted Cash Flow (DCF), but this can change at a moment's notice. Track the value in your watchlist or portfolio and be alerted on when to act.

Approach 2: Netflix Price vs Earnings (P/E)

For profitable companies, the P/E ratio is a useful way to think about what you are paying for each dollar of earnings. It links directly to how quickly earnings may grow and how much risk investors see in those earnings, which together influence what might be considered a normal or fair P/E range for a stock.

Higher growth expectations or lower perceived risk tend to justify a higher P/E, while slower growth or higher risk usually point to a lower P/E. Netflix currently trades on a P/E of 28.66x. This is in line with the Entertainment industry average P/E of 28.66x, while the average P/E across its peer group is 51.82x.

Simply Wall St’s Fair Ratio for Netflix is 31.11x. This proprietary metric estimates what the P/E could be given factors such as earnings growth, industry, profit margins, market cap and company specific risks. Because it incorporates these elements, the Fair Ratio can be more informative than a simple comparison with peers or the broad industry, which may have very different growth or risk profiles.

Comparing Netflix’s current P/E of 28.66x with the Fair Ratio of 31.11x suggests the stock is trading below that fair level.

Result: UNDERVALUED

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Upgrade Your Decision Making: Choose your Netflix Narrative

Earlier it was mentioned that there is an even better way to understand valuation. This is where Narratives come in, which Simply Wall St offers on the Community page as an easy tool for you to attach a clear story to your numbers, link that story to a forecast and Fair Value, and then compare that Fair Value with Netflix’s current price to decide whether the stock looks expensive or attractive for your own view. Each Narrative updates automatically when new data, news or earnings arrive. One investor might plug in a cautious Netflix view using a Fair Value of US$62.62, while another might build a more optimistic story with Fair Values such as US$110.76, US$120.00, US$135.02 or even US$142.64. Both can immediately see how their different assumptions about future revenue, margins, advertising growth or content spending translate into very different estimates and decisions.

For Netflix however we will make it really easy for you with previews of two leading Netflix Narratives:

Both come from active community contributors who are using the same company data you have seen above, but reach very different conclusions about what the stock might be worth and what needs to go right or wrong from here.

First up is a bullish view that sees more upside potential if content spending discipline and new plans pay off, followed by a more cautious view that leans on slower growth and tighter margins.

Fair Value: US$797.74 per share

Gap to this Fair Value using the current price of US$91.02: about 89% below that estimate, using ((797.74 minus 91.02) divided by 797.74).

Revenue growth assumption: 13%

• Assumes consolidation in streaming, with smaller platforms potentially licensing more content out and Netflix using its scale to negotiate favorable terms.
• Sees ad supported plans, paid sharing and future pricing power as important levers for higher Average Revenue Per Member and stronger free cash flow over time.
• Relies on content costs and operating expenses growing more slowly than revenue so that net margins expand and a higher earnings base justifies a much higher fair value.

Fair Value: US$90.80 per share

Gap to this Fair Value using the current price of US$91.02: about 0.2% above that estimate, using ((91.02 minus 90.80) divided by 90.80).

Revenue growth assumption: 9.38%

• Emphasises rising content costs, regulatory pressures and intense competition for viewer attention as forces that could cap margins and earnings strength over time.
• Builds in slower revenue growth, slightly lower profit margins and a modest P/E multiple, which together imply that the current price already sits close to what this narrative sees as fair.
• Highlights that alternative entertainment formats, subscription fatigue and pricing sensitivity could limit how far Netflix can push price increases without seeing higher churn.

If you want to compare more viewpoints using the same data set, you can review how other contributors balance upside against risk and which assumptions they think matter most for Netflix’s long term story through the To see how these results tie into long-term growth, risks, and valuation, check out the full range of community narratives for Netflix on Simply Wall St. Add the company to your watchlist or portfolio so you'll be alerted when the story evolves.

Do you think there's more to the story for Netflix? Head over to our Community to see what others are saying!

This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.