As of this writing, shares of Netflix (NASDAQ:NFLX) have gained a market-stomping 66% over the last 52 weeks. Can the stock run any higher, or are we looking at peak Netflix right now?

Let's find out.

Red Netflix logo on a stucco wall

Image source: Netflix.

Valuation

Using traditional market-value estimates, Netflix comes out looking pricey every time. The stock is trading for 199 times trailing earnings and 86 times forward estimates. You can't measure it against free cash flow because those are negative. And even if you account for Netflix's rampant growth rates, the PEG ratio lands at a nosebleed-inducing 3.2.

By any reasonable standard, then, you'd be crazy to invest in something as crazy-expensive as Netflix.

Why own it, then?

And yet, I own Netflix.

And yet, it is by far my largest holding today.

And yet, I have no plans to sell this stock, as overvalued as it might seem.

That's because there is more to Netflix than its current top and bottom lines. This company is in the early stages of a long-term growth story, and it's not enough to simply consider today's growth rates. Those rates are accelerating.

Year-over-year revenue growth has oscillated around the 30% mark for the last three years. Domestic streaming sales rose 23% higher year over year in the first three quarters of 2017. At the same time, international revenue skyrocketed 56% higher.

Both domestic and overseas sales rose faster than the customer counts for each division, thanks to price increases and a slow but steady migration toward higher-priced streaming plans with access to higher video quality and more concurrent users per account. If nothing else, this trend shows that Netflix has the power to raise subscriber costs without scaring away too many price-sensitive customers.

On top of all that, profit margin is expanding very quickly.

Silhouette of a thinking man.

Image source: Getty Images.

Tell me more!

The so-called contribution margin for Netflix's domestic streaming segment has stabilized just below the 40% mark, clocking in at 38% across the last three quarters. The international division is still laboring near the breakeven point, with a nine-month contribution margin of 2.6%. Management sees no reason why that segment shouldn't be able to reach a similar level of gross profitability within a few years.

Let's say it takes five years to reach that goal. In the meantime, high-octane international growth will have produced at least 300 million non-U.S. customers. If you think that's an unreachable goal in a world with 7.1 billion people, improving economies even in the deepest backwaters, and flourishing broadband access trends around the globe, we will just have to disagree. To me, reaching less than 10% of the world's total households is just a modest early-stage goal.

At that point, we should be looking at 2022 sales of at least $43 billion, up from $5.9 billion today. Contribution profits will land near $16 billion -- a number fully in class with contemporary entertainment giants Sony and Time Warner.

So Netflix is definitely not a panic-sell situation today. The company is earning its sky-high valuations; it just takes some work to see exactly how.

OK, but is it a buy?

That depends.

Opportunistic investors may want to put Netflix on a watch list and wait for the next large drop in share prices. Over the last three years, Netflix shares have plunged more than 10% in a single day on five occasions. There will almost certainly be more of those, though the long-term climb will continue. Might as well get ready to pounce on the next sign of temporary weakness.

Other than that, I see Netflix as a solid storage space for my retirement nest egg. The days of skyrocketing share prices should eventually come to an end, letting the stock grow into its generous valuation metrics. Improving business fundamentals will do some of that work, but a lot has already been factored in. So it's a slow and steady way to win the race. I hardly expect Netflix to double or triple in the next year.

There are hungrier growth stocks available to play that role in my portfolio -- or in yours.

Anders Bylund owns shares of Netflix. The Motley Fool owns shares of and recommends Netflix. The Motley Fool recommends Time Warner. The Motley Fool has a disclosure policy.