Netflix is set to release its first-quarter 2026 earnings report. Here’s Morningstar’s take on what to look for in Netflix’s earnings and the outlook for its stock.
Key Morningstar Metrics for Netflix Stock
- : USD 80.00Fair Value Estimate
- : ★★Morningstar Rating
- : NarrowMorningstar Economic Moat Rating
- : HighMorningstar Uncertainty Rating
Netflix Earnings Release Date
- Thursday, April 16, after the close of trading.
What to Watch for in Netflix’s Q1 Earnings
- The main thing we’ll be looking at is whether Netflix raises its full-year sales guidance in light of the recent price increases. The timing of the increase was much earlier than we expected, so if the firm does not raise fiscal year 2026 guidance, we would take it as a negative.
- Given our view that growth opportunities in the United States are limited by high subscriber penetration, we’re looking for the international markets to continue to grow at greater than 15%.
- It’s also important to see margins hit guidance and ensure that heightened content spending isn’t inhibiting the expected expansion opportunities.
- Apart from results, we’d like to hear about capital allocation plans now that the Warner Bros. WBD merger is off. We’d love for the firm to start paying a dividend, but that’s unlikely. It may increase its buyback authorization.
- Valuation has finally looked reasonable over the past quarter. There’s been a pop over the past week that put the stock back in 2-star territory, but investors who have been waiting for the best-of-breed name to look reasonable rather than at nosebleed levels can be ready to buy on any weakness.
Fair Value Estimate for Netflix
With its 2-star rating, we believe Netflix’s stock is moderately overvalued compared with our long-term fair value estimate of USD 80 per share, which implies a 12-month adjusted price/earnings multiple of 25 times and an enterprise value/adjusted EBITDA multiple of 20 times. We forecast Netflix’s top line to see a 10% compound annual revenue growth rate through 2030.
Read more about Netflix’s fair value estimate.
Economic Moat Rating
We assign Netflix a narrow moat rating based on intangible assets, its lack of legacy assets rapidly losing value as new ways to consume video entertainment emerge, and its head start in accumulating subscribers as a pioneer in its industry. Netflix has the largest subscriber base relative to its competitors, giving it a continuous stream of cash to get the best odds of having popular content while creating high costs for prospective market entrants.
Read more about Netflix’s economic moat.
Financial Strength
Netflix is in good financial shape. It ended 2025 holding USD 9 billion in cash and USD 14.5 billion in total debt. More importantly, the years of cash burn are behind Netflix, giving it a good cash cushion after funding its content budget. Now that it won’t be acquiring Warner Bros., we expect share repurchases to accelerate. As its stock price has traded at relatively low valuations and the firm has alternative uses for its cash flow, we don’t think Netflix will be interested in any other large acquisitions. Netflix does not pay a dividend, nor do we expect it to, but we think it should.
Read more about Netflix’s financial strength.
Risk and Uncertainty
Our Uncertainty Rating for Netflix is High, largely based on the evolving streaming media landscape and the growing competition Netflix faces, including from free streaming platforms.
In our view, Netflix’s tremendous success is due in large part to its being a first mover in the streaming industry. However, the landscape has changed as customers have other choices for programming. These competitors may offer bundled services, services as add-ons for TV subscribers who pay for their linear channels, or lower prices than Netflix.
Additionally, Netflix’s nascent ad-supported service requires it to build an advertising business that makes up for the lower prices these subscribers pay. The firm’s flirtation with major live sports may promote customer stickiness, but such programming typically comes at a very high price.
Read more about Netflix’s risk and uncertainty.
NFLX Bulls Say
- Netflix has already attracted a massive customer base and level of profitability. This advantage versus competitors makes it more likely that a virtuous cycle can continue, with the firm securing more content that attracts and holds more subscribers.
- Advertising-supported subscriptions open Netflix to a wider pool of subscribers and a major new source of revenue.
- Netflix has significant room to grow in international markets where it has already shown promise with local content.
NFLX Bears Say
- Netflix faces competition that it has not had to deal with in the past. As consumers have more options for quality streaming services, it’s more likely that Netflix could get cut out of some consumer budgets.
- Netflix’s US business is mature, with a very high penetration of total households, meaning price increases may need to be a bigger component of future growth.
- Netflix will need to spend more on content—through sports rights and local international investment—to increase membership and prices at rates it has historically achieved when it worked from a lower base and with less competition.
This article was compiled by Jillian Moore.
