• Curious whether Netflix stock looks compelling at today's US$73.78 price, or if the market is already pricing in most of the story? This breakdown focuses squarely on what you are getting for every dollar invested.
• The share price has risen 1.3% over the past week, even after a decline of 14.2% over the last month and a year to date fall of 18.9%, with the stock down 43.0% over the past year but still up 67.1% over three years and 36.2% over five years.
• Recent headlines around Netflix continue to focus on its position in global streaming, its content pipeline, and competition in on demand entertainment. These factors provide context to the share price swings investors have been seeing. Together, these stories shape how the market is currently thinking about future growth, profitability, and risk for the stock.
• Netflix currently has a value score of 5 out of 6, which means it screens as undervalued on most of the checks used here. Next you will see how different valuation approaches line up on that score, with an additional way to think about valuation presented at the end of the article.

Approach 1: Netflix Discounted Cash Flow (DCF) Analysis

A Discounted Cash Flow, or DCF, model estimates what Netflix stock could be worth by projecting future cash flows and discounting them back to today using a required return. It focuses on cash Netflix might generate for shareholders rather than just current earnings.

On this basis, Netflix is being valued using a 2 Stage Free Cash Flow to Equity model. The latest twelve month free cash flow is about $12.0b, and analysts plus extrapolated estimates point to free cash flow of $22.7b by 2030, with detailed projections each year between 2026 and 2035 provided in the model. Simply Wall St uses analyst inputs where available, then extends the series using its own growth assumptions.

Pulling these projected cash flows together and discounting them results in an estimated intrinsic value of $96.72 per share. Compared to the current share price of $73.78, this specific DCF output implies Netflix is 23.7% undervalued on these assumptions.

Result: UNDERVALUED

Our Discounted Cash Flow (DCF) analysis suggests Netflix is undervalued by 23.7%. Track this in your watchlist or portfolio, or discover 42 more high quality undervalued stocks.

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

For a profitable company like Netflix, the P/E ratio is a useful shorthand for how much you are paying for each dollar of current earnings. It captures what the market is willing to pay today, while indirectly reflecting expectations for future earnings and the risk that those earnings might fluctuate.

In general, higher growth expectations and lower perceived risk tend to support a higher P/E ratio, while slower growth and higher risk usually point to a lower, more conservative multiple. Netflix currently trades on a P/E of 23.23x. This sits close to the Entertainment industry average of 22.82x, but well below the peer group average of 55.40x, which indicates that some similar companies trade at much richer earnings multiples.

Simply Wall St also calculates a proprietary “Fair Ratio” for Netflix of 30.30x. This is designed to estimate a suitable P/E given factors such as earnings growth, industry, profit margins, market cap and risk. Because it is tailored to the company, this Fair Ratio can be more informative than a simple comparison with peers or the broad industry, which may have very different profiles. With Netflix on 23.23x versus a Fair Ratio of 30.30x, the stock screens as undervalued using this approach.

Result: UNDERVALUED

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Upgrade Your Decision Making: Choose your Netflix Narrative

Earlier the article mentioned that there is an even better way to understand valuation, so this is where Narratives come in as a simple way for you to connect your view of Netflix’s story to the numbers behind it.

A Narrative on Simply Wall St is your own story for a company, expressed as assumptions for fair value, future revenue, earnings and margins, so you are not just looking at a DCF or P/E in isolation but explaining why those numbers make sense to you.

Each Narrative links three pieces together: the business story you believe, the financial forecast that fits that story, and the resulting fair value that you can then compare with today’s share price to help decide whether Netflix looks priced above or below your expectations.

Narratives are available on Simply Wall St’s Community page and update automatically when new data, news or earnings are added, so your view of Netflix’s fair value stays aligned with the latest information without you rebuilding a model from scratch.

Looking at current Narratives for Netflix, one investor might set a fair value close to US$62.62 based on a DCF with more conservative growth and margins, while another might use a more optimistic Narrative with fair value nearer US$138.56 that leans on higher revenue growth, stronger profit margins and a higher future P/E. Seeing that spread on one screen makes it easier for you to judge where your own view sits.

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.