Alright, let’s talk about this Netflix thing, the one them young folks are always yappin’ about. They keep jabberin’ about some “price to earnings ratio,” or somethin’ like that. Sounds fancy, but I reckon it ain’t that hard to understand once you break it down, like huskin’ corn.
What in tarnation is this P/E ratio anyways?
Well, from what I gather, this P/E thing, or “price to earnings ratio” as them city slickers call it, is just a way to see if a company’s stock is worth a hill of beans. You take the price of the stock, see, how much it costs to buy a piece of the company. Then you look at how much money the company makes for each piece of that stock, somethin’ they call “earnings per share,” or EPS for short. You divide the price by them earnings, and bam! You got your P/E ratio.
- Price of the stock
- Earnings per share (EPS)
- Divide the price by the EPS
So, if the stock price is high and the earnings are low, that P/E number gets big. That means folks are payin’ a lot for each little bit of earnings, maybe too much. If the earnings are good and the price ain’t too crazy, then that P/E number stays lower, which might mean it’s a better deal. It’s like buyin’ eggs, you want the most eggs for your money don’t you? Same kinda thing.
Netflix’s P/E, what’s the story there?
Now, this Netflix, their P/E number jumps around more than a frog on a hot skillet. I hear tell it was as high as 408.5 at one point, and as low as 15.93 at another. Land sakes, that’s a big difference! Right now, it’s somewhere around 50.05, or maybe it’s 88.1593, depends on who you ask and when you ask ‘em. They say at the end of 2022 it was around 29.2. It’s enough to make your head spin.
Why does it change so much, you ask? Well, it’s like this: the stock price goes up and down like a seesaw, dependin’ on what folks think about the company. And them earnings, well, they can change too. If Netflix has a good year, makin’ lots of money from all them shows, the earnings go up. If folks ain’t watchin’ as much, or if they spend too much money makin’ them shows, the earnings might go down.
So, is Netflix a good buy or not?
That’s the million dollar question, ain’t it? And I ain’t got no crystal ball, so don’t expect me to tell you for sure. But I can tell you what them smart fellers look at. They compare Netflix’s P/E to other companies in the same business, seein’ if it’s higher or lower. They also look at how fast Netflix is growin’. If a company’s growin’ fast, folks might be willin’ to pay a higher P/E, ’cause they think it’ll make more money down the road. It’s like plantin’ seeds, you gotta wait a bit for ‘em to grow into somethin’ worthwhile.
Other ways to look at a company
Now, P/E ain’t the only thing to look at, mind you. Them fellers on Wall Street, they got all sorts of fancy numbers they like to crunch. They talk about PEG ratios, and EV/EBITDA, and all sorts of other things that sound like gibberish to me. But they’re all just different ways of tryin’ to figure out if a company is makin’ money, and if it’s worth investin’ in. They even got somethin’ called the current ratio, which I heard is 1.13 for Netflix, whatever that means. Sounds like they’re tryin’ to make things more complicated than they need to be, if you ask me.
Conclusion
So, there you have it. That’s the lowdown on this Netflix price to earnings ratio, as best as I can explain it. It’s just a way to see if you’re gettin’ a fair price for what you’re buyin’, like when you’re hagglin’ at the farmers market. Just remember, the higher the number, the more you’re payin’ for each dollar of earnings. Whether that’s a good deal or not, well, that’s for you to decide. Don’t go blamin’ me if you lose your shirt though! I’m just tellin’ you what I heard.
Just remember to do your homework before you go throwin’ your hard-earned money at anythin’. Talk to someone who knows what they’re doin’, read up on it, and don’t just listen to what some fella on the TV tells ya. And for heaven’s sake, don’t put all your eggs in one basket, as they say. That’s just common sense, even for us country folk.
Tags: [Netflix Price To Earnings Ratio, P/E Ratio, Stock Valuation, Netflix Stock, Earnings Per Share, Investment, Financial Analysis, Netflix Financials, PEG Ratio, Current Ratio]
