January 4, 2011

Netflix (NFLX)

Not thrilled about Netflix:
  • Growth is declining - 40.9% for year-end Dec 2010 vs 37.6% for year end Dec 2011. But not a huge issue with that, 37% is still pretty darn good
  • Somewhat expensive at yesterday's close of $178.41 - trading at 63.9 times 2010 EPS estimate, but my bigger concern is that 63.9 is 1.56 times the 2010 growth
  • Netflix would need to trade up to about 1.7 times the 2010 growth to offer a 10% upside - getting too close to the double growth rate multiple I want to avoid
No go for NFLX. If I'm looking at high-growth stocks, I still like OPEN better which I wrote about yesterday.

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