📺 NETFLIX: ANALYSIS 📺

 📺 NETFLIX: ANALYSIS 📺

Netflix, Inc. provides entertainment services. The company offers television (TV) series, documentaries, feature films, and games across various genres and languages. It also provides members the ability to receive streaming content through a host of internet-connected devices, including TVs, digital video players, TV set-top boxes, and mobile devices. The company operates approximately in 190 countries. Netflix, Inc. was incorporated in 1997 and is headquartered in Los Gatos, California. 

Based on a sample of the last year [3Q/25 TTM], its average margins have been:

- Gross margin: ≈ 47.4%

- Operating margin: ≈ 28.3%

- EBITDA margin: ≈ 29.6%

- Net margin: ≈ 23.9%

- Debt Net / EBITDA: ≈ 0.78x

Pros: 

- Healthy net debt

- Better position compared with its competitors

- Acceptable CAPEX/OPEX ration with increasing of EPS

Cons:

- Slightly high valuation compared to its average

- Potential reduction in demand

- Possible reductions of their margins due to any unforeseen event 

Based on the last report, their normalized annual EPS was ≈ $24.61 USD and its last average ROIC [TTM] was ≈ 28.4%. If an average Forward PER 39 is set up as a benchmark with an EPS intensity of ± 0.3434x, the potential forward spread target for the next 12 months could be:

- Optimistic: ≈ $1289.81 USD

- Neutral: ≈ $960.09 USD

- Negative: ≈ $630.37 USD

At least, an EPS of $4.32 USD is required for the next quarter, to keep the metrics. 

In other hand, if an average Forward EV/EBITDA 30 is set, an EBITDA increases of ± 32%, a Net Debt increases of -7.04%, a Dividends increase of 0.0% and Shares Outstanding increases of ± -1.06%, the potencial spread price target for the next 12 months could be:

- Optimistic: ≈ $1212.02 USD

- Neutral: ≈ $899.85 USD

- Negative: ≈ $596.94 USD

Finally, according to its current P/S ratio, a possible spread for the next 12 months might be at:

- P/S 10: ≈ $1023.73 USD

- P/S 5: ≈ $511.86 USD

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M.I.E.F. J. Joel Padilla

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