Is Netflix’s Stock Overvalued or Undervalued?

The Netflix sign is seen at the company’s headquarters in Los Gatos, Calif., in a file photo. Justin Sullivan/Getty Images

Netflix shares have outperformed the S&P 500 in 2021, generating a year-to-date total return of 25.9 percent.

But after gaining 114.6 percent in the past three years, investors may be wondering if there’s any value left in Netflix stock.

Earnings

A price-to-earnings ratio (PE) is one of the most basic fundamental metrics for gauging a stock’s value. The lower the PE, the higher the value. For comparison, the S&P 500’s PE is at about 29, nearly double its long-term average of 15.9.