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Where Does Netflix’s Valuation Stand among Peers?

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Netflix’s scale in streaming space

Earlier in the series, we discussed Amazon and Microsoft’s value proposition in the Internet and application software space. Now, let’s look into Netflix’s (NFLX) scale in the streaming space. On February 23, 2018, Netflix with a market capitalization of ~$124 billion was a leading player in the video streaming space. Twenty-First Century Fox (FOXA), CBS (CBS), and Time Warner (TWX) are other prominent players in this space.

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In its fiscal 4Q17 results, Netflix mentioned Amazon’s (AMZN) Prime Video, Google’s (GOOG) YouTube, and Disney (DIS) as its competitors. The company also mentioned Apple and Facebook (FB) in the same section, as they have recently entered the original content space, wielding relatively large budgets.

Enterprise value multiples

Netflix was trading at a forward EV-to-EBITDA multiple of ~64.4x on February 23, 2018. This metric was higher than FOXA’s and TWX’s multiple of ~11.8x and 10.01x, respectively. The metric for CBS was ~9.5x.

Dividend yields

Netflix doesn’t pay dividends. Twenty-First Century Fox’s forward annual dividend yield was ~0.95% as of February 23, 2018, which was lower than Time Warner and CBS’s forward dividend yields of ~1.7% and ~1.3%, as of February 23.

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