Numbers analysis: Netflix (NFLX) 2021

I decided to revisit Netflix. I owned it the past and bought back a small position today. My last analysis was in December 2020.

Netflix’s primary business is a streaming video on demand service now available in almost every country worldwide except China. Netflix delivers original and third-party digital video content to PCs, Internet-connected TVs, and consumer electronic devices, including tablets, video game consoles, Apple TV, Roku, and Chromecast. In 2011, Netflix introduced DVD-only plans and separated the combined streaming and DVD plans, making it necessary for subscribers who want both to have separate plans.

Description from

The price broke out after over a year of sideways movement. Monster stocks have a tendency of going sideways for long periods before continuing up.


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Weekly chart
Daily chart


The numbers analysis below is the first step in Rule 1 Investing by Phil Town. In his book Rule #1: The Simple Strategy for Successful Investing in Only 15 Minutes a Week! (no affiliate) he writes about his investing philosophy which centers around four key principles he refers to as the Four M’s: Meaning, Moat, Management and Margin of Safety.

The first requirement is an average annual growth rate of at least 10%, the past 10 years, in the ROIC (Return On Invested Capital), Sales, EPS (Earnings Per Share), Equity and Cash Flow. The average 5 year and 1 year growth rates should also be above 10%. High growth rates suggest a sustainable MOAT.

Next step is to analyze the the Four M’s: Meaning, Moat, Management and Margin of Safety.

The aim is to find a fantastic company, with a great track record, to invest in for at least 10 year. The expected average yearly return is at least 15%. This is used in the calculations. With an investment of 100 USD and a yearly return of 15%, 100 USD will have increased to 405 USD in 10 years time because of interest-on-interest or compound interest.

Sales (MUSD)32052609437555056780
EPS (USD)0.590.040.260.620.28
Equity (MUSD)643745133418582223
Operational cash flow (MUSD)22612617152112403266799122641

Sales (MUSD)883111693157942015624996
EPS (USD)0.431.252.684.136.08
Equity (MUSD)268035825239758211065
Operational cash flow (MUSD)186678558929121124218669162761395

ROIC and P/E are The rest are from

Growth Rates

Yearly average10 year5 year1 year
Sales Growth Rate26%39%24%
EPS Growth Rate30%116%47%
Equity Growth Rate37%49%46%
Cash Flow Growth Rate32%118%48%

Price calculations

Growth rates x 2AverageMedian P/EAverage between the high and low P/E
Calculated future price in 10 years24616468373398137459
Calculated Price61541170984959365
Margin of Safety (50%)3077585542484682

Current price: 582 USD

Fair value price range: 6154 – 11709 USD

MoS price range: 3077 – 5855 USD

To be considered for further analysis here, as a growth stock, the requirement is that the 10 year yearly average growth rate is at least 5% in all five categories. They are.

The numbers are higher than in my last post. Almost everytime I do this rule 1 calculations they are off the charts in these kind of companies with high growth rates. I don’t know what to make of it. I’m considering my position as a long term (years) hold.

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