That is the case with the famed streaming service Netflix Inc. (NFLX). The stock has weathered a lot of difficult months amidst the question of how much more it will grow.
But the stock has solid financials, with a price-to-earnings (P/E) ratio of about 20 and a price-to-book ratio of only five. Despite spending big on films and television shows, the company is profitable, with earnings of over 10 dollars a share over the last year.
And there is still room to grow. Just this week, Nielsen, the famed ratings company, reported that, in July, streaming hours surpassed cable viewing hours for the first time.
With more and more people “cutting the cord,” Netflix will see more viewers coming its way. Its management has even expressed interest in streaming live sports.
With so much focus on the growth, or lack of growth, of its subscriber base, we think that analysts have been overly pessimistic about what is a solid company and the clear pioneer of streaming services.
Netflix is not going away anytime soon and has solid numbers, while being down significantly from its 52-week high of $700.
These are the kinds of stocks we track over the long term to find the right time to buy in, and we think that this is just one of those opportunities. So, let’s “Netflix and Chill” for now at this price and make some money.