Based on the aggregated intelligence of 160,000-plus investors participating in Motley Fool CAPS, the Fool's free investing community, movie rental service Netflix (Nasdaq: NFLX) has received a distressing two-star ranking.

With that in mind, let's take a closer look at Netflix's business and see what CAPS investors are saying about the stock right now.

Netflix facts

Headquarters (Founded)

Los Gatos, Calif. (1997)

Market Cap

$5.65 billion


Internet retail

Trailing-12-Month Revenue

$1.77 billion


Founder/CEO Reed Hastings

CFO Barry McCarthy, Jr.

Return on Capital (Average, Past 3 Years)



$266.3 million / $200 million

Price-to-Earnings (NFLX and S&P 500)

49 and 20

3-Month Return



Blockbuster (NYSE: BBI)

Coinstar's (Nasdaq: CSTR) Redbox

Sources: Capital IQ (a division of Standard & Poor's), Morningstar, and Motley Fool CAPS.

On CAPS, 16% of the 7,652 members who have rated Netflix believe the stock will underperform the S&P 500 going forward. These bears include compfreak999 and All-Star TMFDeej, who is ranked in the top 1% of our community.

Just last week, compfreak999 wrote that Netflix bear case all boiled down to price: "Love the company, love their direction, love their innovation. Hate their overvaluation."

In a reply pitch from three days later, TMFDeej expanded on the stock's digital downside:

DVDs are hurting and so is the US Postal Service. ... I canceled my Netflix subscription a while ago, partly because I didn't have enough time to watch full movies with lots of work and two young kids, but partly because it's so much easier to just push a button and watch a movie whenever I want to right on my television or computer.

The real question that one has to ask themselves when buying this stock is what competitive advantage does Netflix have in the download arena? ... Perhaps Netflix will adapt well and it will eventually become the king of pay-per-view, it seems like a fairly well-run company, but I wouldn't pay 40 times earnings to find out if that is going to happen.

What do you think about Netflix, or any other stock for that matter? If you want to retire rich, you need to protect your portfolio from any undue risk. Staying away from dangerous stocks is crucial to securing your financial future, and on Motley Fool CAPS, thousands of investors are working every day to flag them. CAPS is 100% free, so get started!

Fool contributor Brian Pacampara owns no position in any of the companies mentioned. Netflix is a Motley Fool Stock Advisor pick. The Fool's disclosure policy always gets a perfect score.