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Why Netflix Is Poised to Pull Back

By Brian D. Pacampara, CFA - Apr 24, 2013 at 5:00PM

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Market-lagging returns could be written in this 2-Star.

Based on the aggregated intelligence of 180,000-plus investors participating in Motley Fool CAPS, the Fool's free investing community, movie rental service Netflix (NFLX 1.39%) has received a distressing two-star ranking.

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

Netflix facts

Headquarters (founded)

Los Gatos, Calif. (1997)

Market Cap

$12.2 billion

Industry

Internet retail

Trailing-12-Month Revenue

$3.8 billion

Management

Founder/Chairman/CEO Reed Hastings

CFO David Wells

Return on Capital (average, past 3 years)

23.9%

Cash/Debt

$1.0 billion/$700 million

Competitors

Amazon.com

Apple 

Comcast 

Sources: S&P Capital IQ and Motley Fool CAPS.

On CAPS, 21% of the 6,812 members who have rated Netflix believe the stock will underperform the S&P 500 going forward.

Just yesterday, one of those Fools, All-Star DJoshuaRubin, tapped Netflix as a particularly speculative selection:

Negative free cashflow and a model that depends on big media giving them content. Secretive about some debt. Might be a home run long haul, but there are big reasons to be nervous. Hard to imagine how this is the best place to put money with such gigantic question marks. Bizarre stock. ... Bottom line is -- no one has a clue how this will shake out. We only know that who ever guesses right -- GUESSES -- will crow about their predictive genius later.


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Stocks Mentioned

Netflix, Inc. Stock Quote
Netflix, Inc.
NFLX
$190.44 (1.39%) $2.62

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