Netflix

Methodology

Netflix's streaming subscription model creates relatively predictable revenue growth, though subscriber additions and ARPU expansion can fluctuate with content slate strength and competitive intensity. International expansion and advertising tier launches provide growth visibility. The calculation works reasonably well when content spending stabilizes and free cash flow generation becomes consistent.

Methodology

Netflix's PEG ratio varies widely based on subscriber growth expectations and profitability trajectory as the business matures from growth to cash generation mode. During periods of strong subscriber momentum, moderate PEG ratios can be justified. Compare to historical ranges and consider the shift from growth investment to margin expansion and cash flow generation.

Methodology

Netflix pays no dividend, making PEGY equal to PEG as management prioritizes content investments and share buybacks as free cash flow inflects positive. Capital allocation focuses on content library strength and opportunistic repurchases. For this maturing streaming leader, the transition to consistent free cash flow generation matters more than current shareholder income.