Is Netflix, Inc. overvalued or undervalued?

As of 17 July 2025, the valuation grade for Netflix, Inc. changed from very expensive to expensive, indicating a shift in perception but still suggesting that the stock may be overvalued. The company is currently assessed as expensive, with a P/E ratio of 58, a Price to Book Value of 22.54, and an EV to EBITDA ratio of 20.62. Compared to its peers, Automatic Data Processing, Inc. has a P/E of 45.48 and an EV to EBITDA of 31.13, while Paychex, Inc. shows a fair valuation with a P/E of 27.39 and an EV to EBITDA of 20.18, highlighting that Netflix's valuation remains higher than these comparable firms.
Despite its high valuation, Netflix has delivered impressive returns, with a year-to-date return of 35.50% compared to the S&P 500's 12.22%, and a one-year return of 74.92% versus the S&P 500's 17.14%. However, the significant discrepancy in long-term performance, particularly over three years where Netflix returned 402.97% against the S&P 500's 70.41%, suggests that while the stock may be overvalued, its growth potential has historically rewarded investors.