Netflix Inc. (NASDAQ:NFLX)

The valuation ratios exhibit generally increasing trends over the observed period, with some fluctuations. A consistent pattern of growth is apparent in all four ratios – Price to Earnings (P/E), Price to Operating Profit (P/OP), Price to Sales (P/S), and Price to Book Value (P/BV) – from the beginning of the period through the end of 2025. However, the rate of increase varies between ratios, and a slight decline is noted in the most recent quarter.

Price to Earnings (P/E)

The P/E ratio demonstrates a generally upward trajectory, increasing from 19.36 to 50.14 between March 2022 and June 2025. A significant jump is observed between September 2022 and December 2022, and again between March 2023 and June 2023. The ratio peaks in June 2025 before decreasing to 33.11 by December 2025. This suggests increasing investor expectations for earnings growth, followed by a potential reassessment in the final quarter.

Price to Operating Profit (P/OP)

Similar to the P/E ratio, P/OP shows a consistent increase from 15.62 to 41.76 over the majority of the period. The growth is less pronounced than that of the P/E ratio, but the trend remains positive. A notable increase occurs between March 2023 and June 2023. The ratio also experiences a decline in the final quarter, ending at 27.28, mirroring the trend observed in the P/E ratio.

Price to Sales (P/S)

The P/S ratio exhibits the most substantial increase among the four ratios, rising from 3.19 to 12.32 between March 2022 and June 2025. This indicates a growing willingness of investors to pay a premium for each dollar of revenue. The most significant increase occurs between September 2023 and June 2025. A decrease to 8.05 is observed in the final quarter, though the ratio remains significantly higher than at the beginning of the period.

Price to Book Value (P/BV)

The P/BV ratio also demonstrates a clear upward trend, increasing from 5.53 to 20.59 between March 2022 and June 2025. This suggests that the market increasingly values the company’s net assets. The largest increase is seen between December 2022 and December 2023. Like the other ratios, the P/BV ratio declines in the final quarter, finishing at 13.66. This could indicate a shift in market perception regarding the company’s asset value.

The concurrent declines in all four ratios during the final quarter suggest a potential market correction or a change in investor sentiment. Further investigation would be required to determine the underlying causes of this shift. Overall, the period is characterized by increasing valuation multiples, followed by a modest pullback in the most recent quarter.

The price-to-earnings (P/E) ratio exhibited considerable fluctuation throughout the observed period, spanning from March 31, 2022, to December 31, 2025. Initially, the ratio demonstrated relative stability, followed by a period of significant increase and subsequent moderation.

Initial Period (Mar 31, 2022 – Dec 31, 2022)

The P/E ratio began at 19.36 and experienced a gradual increase to 23.66 by September 30, 2022. A substantial jump was then observed, reaching 36.18 by the end of 2022. This increase suggests growing investor optimism relative to earnings during this timeframe, or potentially a decline in earnings relative to price.

Volatility and Moderation (Mar 31, 2023 – Dec 31, 2023)

The first three quarters of 2023 saw continued volatility, with the P/E ratio peaking at 44.61 in June 2023 before decreasing to 38.78 in September 2023. The ratio then increased again to 45.64 by December 31, 2023, indicating ongoing uncertainty and shifting investor sentiment. Earnings per share also increased during this period, but not at a rate sufficient to offset the price increases.

Recent Trend (Mar 31, 2024 – Dec 31, 2025)

From March 31, 2024, the P/E ratio showed a more defined downward trend, albeit with some fluctuations. It decreased from 37.14 to 33.11 by December 31, 2025. This decline coincided with a consistent increase in earnings per share, suggesting that earnings growth began to outpace price appreciation. The highest P/E ratio during this period was 47.72 in March 2024, while the lowest was 33.11 in December 2025.

Overall, the P/E ratio demonstrated a pattern of initial stability, followed by a period of significant increase and then a gradual decline. The latter portion of the period suggests a potential recalibration of market valuation as earnings increased. The fluctuations throughout the period indicate sensitivity to market conditions and investor expectations.

The Price to Operating Profit (P/OP) ratio for the analyzed period demonstrates considerable fluctuation. Initially, the ratio exhibited an increasing trend from March 31, 2022, to December 31, 2022, followed by a period of volatility and then a generally upward trajectory through June 30, 2025, before concluding with a decrease by December 31, 2025.

Initial Increasing Trend (Mar 31, 2022 – Dec 31, 2022)

The P/OP ratio increased from 15.62 to 28.85 over this period. This suggests that the market was willing to pay an increasingly higher price for each dollar of operating profit generated. This increase coincided with a relatively stable operating profit per share, indicating a greater investor confidence or expectation of future growth.

Volatility and Subsequent Growth (Jan 1, 2023 – Jun 30, 2025)

From March 31, 2023, to June 30, 2025, the P/OP ratio experienced fluctuations, peaking at 41.76. This period is characterized by a general upward trend, although not consistently linear. The concurrent increase in operating profit per share likely contributed to the higher valuations observed during this timeframe. The ratio’s peak suggests a strong positive market sentiment and potentially optimistic growth projections.

Recent Decline (Jul 1, 2025 – Dec 31, 2025)

A notable decrease in the P/OP ratio occurred between June 30, 2025, and December 31, 2025, falling from 41.76 to 27.28. This decline, despite continued growth in operating profit per share, indicates a potential shift in market perception. Factors contributing to this could include broader economic concerns, increased competition, or a reassessment of the company’s future growth prospects. The decrease suggests investors were willing to pay less for each dollar of operating profit at the end of the analyzed period.

Overall, the P/OP ratio demonstrates a sensitivity to both changes in share price and operating profit per share. The observed trends suggest periods of increasing investor optimism, followed by periods of reassessment and potential correction. The final decline warrants further investigation to determine the underlying causes and potential implications for future valuation.

The price-to-sales ratio exhibited a generally increasing trend over the observed period, though with notable fluctuations. Initially, the ratio demonstrated relative stability between March 2022 and June 2022, hovering around 3.2. A subsequent increase was observed through December 2022, reaching a peak of 5.14. Following this peak, the ratio experienced a decline in the first half of 2023 before resuming an upward trajectory.

Overall Trend

From March 2022 to December 2023, the price-to-sales ratio generally increased, indicating investors were willing to pay more for each dollar of sales. The ratio more than doubled over this period, rising from 3.19 to 7.32. However, the ratio then decreased significantly in the first half of 2024 before increasing again to reach 12.32 in June 2025.

Peak and Subsequent Decline

The highest recorded price-to-sales ratio was 12.32 in June 2025. This was followed by a decrease to 10.91 in September 2025 and a more substantial decline to 8.05 by December 2025. This recent decline suggests a potential shift in investor sentiment or a reassessment of the company’s growth prospects relative to its sales.

Relationship to Share Price and Sales per Share

The price-to-sales ratio’s movements correlate with both the share price and sales per share. Increases in the ratio generally coincide with increases in both components, and vice versa. The substantial increase in the ratio from late 2023 through mid-2025 appears driven by a more rapid increase in share price compared to sales per share.

The fluctuations in the price-to-sales ratio suggest a dynamic valuation influenced by market conditions and investor expectations. The recent decline from the peak warrants further investigation to determine its sustainability and underlying causes.

The price-to-book value (P/BV) ratio exhibited a generally increasing trend over the observed period, punctuated by periods of fluctuation. Initial values were in the mid-5 range, rising to a peak in late 2025 before declining. A detailed examination of the progression reveals distinct phases.

Initial Phase (Mar 31, 2022 – Dec 31, 2022)

The P/BV ratio began at 5.53 and demonstrated moderate volatility, reaching 7.82 by the end of 2022. This period suggests increasing investor confidence relative to the company’s book value, though with some quarterly variation.

Growth and Peak (Mar 31, 2023 – Jun 30, 2025)

From early 2023 through mid-2025, the P/BV ratio experienced substantial growth, climbing from 6.68 to a high of 20.59. This indicates a significant premium investors were willing to pay for each dollar of book value, potentially driven by expectations of future earnings growth or a reassessment of the company’s intrinsic value. The ratio exceeded 14.00 starting in September 2024.

Recent Decline (Sep 30, 2025 – Dec 31, 2025)

The final quarter observed a notable decrease in the P/BV ratio, falling from 18.23 to 13.66. This suggests a potential correction in investor sentiment, possibly due to changing market conditions, company-specific news, or a reassessment of growth prospects. The book value per share continued to increase throughout this period, while the share price decreased.

The book value per share consistently increased throughout the entire period, moving from 3.95 to 6.30. This steady growth in book value provides a baseline against which to interpret the more volatile movements in the P/BV ratio. The most significant increases in book value occurred between June 30, 2024 and December 31, 2025.

The share price also generally increased over the period, but with more pronounced fluctuations than the book value per share. The largest increase in share price occurred between December 31, 2022 and June 30, 2025.

Overall, the P/BV ratio demonstrates a dynamic relationship between market perception and underlying asset value. The observed trends suggest periods of increasing optimism followed by a recent shift towards a more moderate valuation.