NETFLIX INC (NASDAQ:NFLX) Emerges as a Prime GARP Candidate with Strong Growth and Reasonable Valuation

Investors looking for growth possibilities often deal with the task of weighing development possibility against fair cost. The Growth At Reasonable Price (GARP) method tackles this by selecting companies showing solid growth paths while keeping rational prices. This system steers clear of both costly momentum stocks and heavily reduced value traps, concentrating rather on firms with lasting development possibilities trading at acceptable multiples. One filtering tactic using this idea is the "Affordable Growth" screen, which finds stocks with growth scores over 7, good profitability and financial condition grades, and valuation scores above 5 to confirm fair cost.

NETFLIX INC (NASDAQ:NFLX) appears as a candidate matching this investment method. The streaming entertainment leader shows the basic traits that match affordable growth standards, especially via its even mix of development speed and considered valuation.

Growth Path

Netflix's growth story stays strong, with the company getting 8 out of 10 in the growth group. The streaming innovator has shown solid development in important financial measures:

• Earnings Per Share has jumped 35.48% over the last year with an average yearly growth rate of 36.86%
• Revenue grew 15.41% in the most recent year, keeping a 14.11% average yearly growth rate
• Forward estimates predict continued strength with EPS expected to increase 22.09% each year
• Revenue growth is forecast to keep its speed at 12.02% each year

This maintained growth design is key for the affordable growth plan, as it shows the company can provide increasing earnings without depending on too much multiple growth. The steadiness between past results and future estimates offers assurance in the durability of Netflix's growth account.

Valuation Review

With a valuation score of 5, Netflix shows an even image that fits the fair price part of the GARP method. The valuation measures display varied signs:

• The P/E ratio of 45.73 seems high next to the S&P 500 average of 26.89
• Forward P/E of 33.16 stays above the market average of 22.99
• However, compared to similar companies, Netflix trades for less than 72.50% of entertainment firms
• Enterprise Value to EBITDA and Price/Free Cash Flow ratios point to better comparative value
• The PEG ratio, which includes growth, hints at a more acceptable valuation

For growth-at-reasonable-price investors, this valuation picture shows that while Netflix is not heavily discounted, its cost turns more acceptable when thinking about its development possibilities and industry place. The higher valuation is partly balanced by better growth speeds and industry-comparative discounts.

Profitability Power

Netflix does very well in profitability with a score of 9, a key part for lasting growth. The company's performance measures show great operational results:

• Return on Assets of 19.30% does better than 95% of similar companies
• Return on Equity of 41.07% is higher than 93.75% of rivals
• Return on Invested Capital of 24.32% is in the top 1.25% of the industry
• Profit Margin of 24.58% beats 95% of entertainment firms
• Operating Margin of 29.51% is above 97.50% of industry peers

These excellent profitability measures give basic support for the growth account, showing that Netflix's development comes with strong operational effectiveness and cash flow creation—necessary traits for affordable growth investments.

Financial Condition

The company's financial condition score of 8 shows a sound balance sheet base:

• Altman-Z score of 12.52 shows very low bankruptcy danger
• Debt to Free Cash Flow ratio of 1.70 displays good debt handling ability
• Share count decrease via buybacks shows capital control
• Debt to Equity ratio of 0.58 matches industry standards

This financial steadiness is especially important for growth investors, as it lowers the danger of operational trouble and offers room for continued investment in content and development projects.

The mix of Netflix's solid growth path, fair comparative valuation, excellent profitability, and sound financial condition forms a profile that fits well with affordable growth investing ideas. While the absolute valuation multiples may make some investors hesitant, the growth speeds and profitability measures provide basic reasons for the present cost.

Investors curious to find like affordable growth chances can find other filtering outcomes through the given link. A more detailed basic study of Netflix is ready in the full basic report.

Disclaimer: This study is based on basic information and filtering rules for learning reasons only. It does not form investment guidance, and investors should do their own study and think about their personal money situations before making investment choices. Past results do not ensure future outcomes, and all investments hold risk including possible loss of original money.