Netflix (NASDAQ:NFLX) has shown impressive performance in 2023, with shares increasing by approximately 25% since early January, trading around $1,100 per share. Several factors have contributed to this rise, including strong financial performance driven by subscriber growth via lower-priced ad-supported plans, a crackdown on password sharing, and increased advertising revenue. In Q1 2025, Netflix’s revenues surpassed expectations, rising 13% to $10.54 billion, while earnings grew 25% to $6.61 per share. Additionally, the company has successfully raised subscription prices without facing significant customer resistance. In late January 2025, the cost of its standard plan increased to approximately $18 per month, while its premium plan rose to about $25 per month. So, is Netflix stock still a good value?

Image by Napoleon Schwan from Pixabay

At its current price, we find NFLX stock attractive yet volatile, making it a complex choice for investors. Concerns about the high valuation of Netflix contribute to its volatility. This heightened sensitivity makes the stock attractive but subject to significant risks.

Our analysis evaluates Netflix’s current valuation against its recent operating performance and overall financial condition. Key metrics indicate that Netflix exhibits a very strong operational record, which we outline below. However, those seeking a balance of potential upside with lower volatility may consider the Trefis High Quality portfolio, which has surpassed the S&P 500, yielding over 91% returns since its inception.

Netflix Valuation Compared to the S&P 500

When assessing cost per dollar of sales or profit, Netflix stock appears very expensive compared to the broader market:

• Netflix’s price-to-sales (P/S) ratio stands at 12.3, while the S&P 500’s is at 2.8.
• The price-to-free cash flow (P/FCF) ratio for Netflix is 65.3 compared to 17.6 for the S&P 500.
• Additionally, the price-to-earnings (P/E) ratio for Netflix is 55.2 versus 24.5 for the benchmark index.

Revenue Growth at Netflix

In recent years, Netflix has experienced remarkable revenue growth:

• Over the past three years, Netflix’s average annual revenue growth rate is 9.6%, compared to the S&P 500’s 6.2%.
• The company’s revenue increased from $35 billion to $40 billion in the previous 12 months, a growth of 15.6%, while the S&P 500 saw a 5.3% increase.
• In the most recent quarter, Netflix’s quarterly revenues rose 16.0% to $11 billion, up from $9.4 billion a year ago, compared to a 4.9% growth for the S&P 500.

Profitability of Netflix

Profit margins at Netflix are competitive within the Trefis coverage universe:

• For the last four quarters, Netflix reported an operating income of $10 billion, reflecting a high operating margin of 26.7%, compared to 13.1% for the S&P 500.
• The operating cash flow (OCF) for the same period was $7.4 billion, yielding a moderate OCF margin of 18.9%, versus 15.7% for the S&P 500.
• Net income was reported at $8.7 billion, indicating a high net income margin of 22.3%, compared to 11.3% for the S&P 500.

Financial Stability of Netflix

Netflix’s balance sheet indicates a very strong financial standing:

• As of the latest quarter, Netflix’s debt stood at $16 billion, while its market capitalization was $474 billion as of May 12, 2025. This results in a low debt-to-equity ratio of 3.2%, compared to the S&P 500’s 21.5%.
• Cash and cash equivalents amount to $8.4 billion out of Netflix’s $52 billion in total assets, resulting in a strong cash-to-assets ratio of 17.9%, compared to 15.0% for the S&P 500.

Resilience of NFLX Stock in Downturns

This section will delve into how well Netflix stock performs during economic downturns and its resilience against market volatility.