Should You Buy Netflix Stock Right Now? |

Netflix (NFLX +4.77%) isn’t Wall Street’s favorite stock these days. As of June 29, it’s down 44% over the last year, trading at a modest 24 times trailing earnings. Are people selling Netflix stock for good reason, or is it a fantastic buy at these low prices?

The efficiency king nobody’s talking about

Netflix doesn’t just make money; it makes money efficiently.

• Return on assets? 23.7%, more than triple the next-best entertainment stock, Fox Corp. (FOX +4.42%).
• Return on invested capital? 28.8%, again about triple Fox’s runner-up reading.
• Return on equity? 48.5%. You guessed it — roughly three times Fox’s returns on shareholder equity. Sure, Warner Music Group (WMG +2.09%) runs ahead at 68.5%, but that’s not necessarily a good thing. It’s the math you get from Warner’s low equity and a heavy debt load.

These aren’t just profit percentages that look good on a spreadsheet. They’re evidence that Netflix squeezes more profit out of every dollar than its sector rivals can dream of.

It’s still growing at scale

Here’s the thing about large companies: They’re supposed to slow down over time. Netflix didn’t get the memo.

For a company generating over $47 billion in annual revenue, Netflix continues to expand at an impressive clip. Revenue rose 16% year over year in the first quarter, and analysts expect roughly 12% annual growth over the next three years. That’s like watching a weight lifter win a cross-country footrace.

The valuation reset

From 2023 to 2025, Netflix largely traded at 50-plus times earnings. Investors gladly paid up, and the stock soared to a record market cap of $569 billion last summer.

Things have changed. Netflix’s stock plunged amid the Warner Bros. Discovery (WBD 1.23%) bidding drama and Q2 revenue and earnings guidance just below the Street’s consensus estimates. I already mentioned the 24x P/E ratio and 44% price drop. Netflix isn’t on clearance, but the “overpriced” argument has lost its teeth.

Should you buy?

Netflix combines best-in-class operational efficiency with double-digit revenue growth and a valuation that no longer demands perfection. The stock isn’t broken; it’s just unfashionable. That’s a great setup for long-term investors.

Anders Bylund has positions in Netflix. The Motley Fool has positions in and recommends Netflix and Warner Bros. Discovery. The Motley Fool has a disclosure policy.