Based on the aggregated intelligence of 170,000-plus investors participating in Motley Fool CAPS, the Fool's free investing community, movie rental service Netflix
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 | $13.8 billion |
| Industry | Internet retail |
| Trailing-12-Month Revenue | $2.4 billion |
| Management | Founder/Chairman/CEO Reed Hastings CFO David Wells |
| Return on Capital (Average, Past 3 Years) | 34.7% |
| Cash/Debt | $342.7 million / $235.7 million |
| Competitors |
Amazon.com Apple Dish Network |
Sources: Capital IQ (a division of Standard & Poor's) and Motley Fool CAPS.
On CAPS, 21% of the 8,923 members who have rated Netflix believe the stock will underperform the S&P 500 going forward. These bears include All-Stars bluedome and kurtdabear, both of whom are ranked in the top 16% of our community.
Just last month, bluedome touched on Netflix's seemingly unsustainable valuation:
[W]ay overvalued based on the strength of its moat and the potential competition, and the pressure it will experience from content providers. What it is doing is not technically that hard, and there are plenty of players with deep enough pockets to compete if they decide to.
In fact, Netflix currently sports a lofty price-to-cash flow of 45. That represents a clear premium to increasing threats like Amazon (28.6), Apple (11.7), and Dish Network (5.7).
CAPS All-Star kurtdabear elaborates on the Netflix bear case:
Too many market analysts use straight-line analysis of companies, which leads to absurd expectations. You don't have to be a Ponzi scheme to run out of customers. Add to that the fact that at least a dozen potential competitors are circling NFLX, looking for a piece of the action, and things start to look a little more rough than rosy not too far down the road. A 70 PE? No way!
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!
