Shares of online streaming company Netflix (NFLX) fell 6.3% to close at $265.14 on December 7. Netflix has generated returns of -7.3% this month and -29% since the start of October. Despite Netflix’s recent pullback, the stock has gained an impressive 38% in 2018.
Netflix stock has risen by an astonishing 114% in the last three years and 408% in the last five years.
Is Netflix’s PE ratio high?
While it might look like Netflix is currently trading at a high forward 2018 PE ratio of 99.6x, its revenue is expected to rise 35% to $15.82 billion, while its EPS are expected to rise 113% to $2.66 in the year.
Netflix is expected to grow its revenue 26%, while its EPS are expected to rise 57% in 2019. In comparison, its PE ratio for 2019 is expected to be 63x. Netflix is expected to grow its earnings at a compound annual growth rate of 62% over the next five years.
Of the 41 analysts covering Netflix, 25 have “buy” recommendations, 14 have “hold” recommendations, and two have “sell” recommendations. The average 12-month price target for Netflix is $395.66, which indicates a potential upside of 50% for its stock.