# Netflix stock looks cheap ahead of July 16 earnings report

**Published:** 2026-07-13T22:23:37.629Z  
**Topic:** Netflix  
**Sentiment:** neutral  
**Publisher:** TrendWatcher — https://www.trendwatcher.in/article/d1a0d38a-c7f3-4851-927b-2109e6bd9664

Netflix trades at ~24‑25 × earnings, free cash flow $5 bn Q1 and $12.5 bn forecast 2026 – see why analysts flag it as a buy before earnings.

Netflix shares are trading around 24‑25 times forward earnings, the lowest multiple since the 2022 bear market, as the company heads into its July 16 earnings release [1].

| At a glance | |
|---|---|
| Stock price multiple | ~24 × earnings |
| Q1 free cash flow | $5.09 bn |
| 2026 free cash flow guidance | $12.5 bn |
| Q2 revenue outlook | $12.57 bn |

## Valuation and cash generation  
Netflix reported $12.2 bn of revenue in Q1 2026, up 16.2 % year‑over‑year, and earnings surged 86 % to $1.23 per share, buoyed by a $2.8 bn termination fee from the collapsed Warner Bros. deal [1]. The company’s free cash flow of $5.09 bn in the quarter represents a 91 % year‑over‑year increase, and management now projects $12.5 bn of free cash flow by the end of 2026 [2]. These cash metrics support a price‑to‑free‑cash‑flow ratio of 34, aligning Netflix with the broader S&P 500 despite revenue growing at a mid‑teens clip [2]. With a forward P/E of 25 and a price‑to‑book ratio that has not been this low since mid‑2022, the stock appears undervalued relative to its cash‑rich balance sheet [1][2].

## Competitive positioning  
Netflix remains the most‑watched streaming service and boasts the lowest churn rate among its peers [1]. Compared with Disney’s direct‑to‑consumer segment, which is still chasing sustainable profitability, Netflix guides a company‑wide operating margin of 31.5 % for 2026, up from 29.5 % the prior year [2]. Warner Bros. Discovery continues to run a negative free cash flow profile, while Netflix’s debt‑to‑equity stands at 0.54 and net‑debt/EBITDA at 0.18, metrics that outperform both rivals [2]. The ad‑supported tier now accounts for over 60 % of Q1 sign‑ups in ad markets, with advertiser count up 70 % year‑over‑year to more than 4,000 clients, and management targets roughly $3 bn in ad revenue for 2026—double the prior year’s figure [2].

## What to watch
- July 16 earnings release and Q2 revenue guidance (forecast $12.57 bn) [1].
- Progress on the ad‑supported tier’s revenue target of $3 bn for 2026 [2].
- Any update on share buybacks, given $1.3 bn of repurchases in Q1 and $6.8 bn remaining authorized [2].

The combination of a deep cash moat, a low valuation relative to earnings, and margin expansion through advertising makes Netflix a compelling case study for investors watching the streaming sector’s recovery. Whether the upcoming earnings confirm these trends will shape the stock’s trajectory in the months ahead.

## Sources
1. The Motley Fool — [The 1 reason to buy Netflix](https://www.fool.com/investing/2026/07/13/there-are-plenty-of-reasons-to-buy-netflix-stock/)
2. 247wallst — [Here Is the Main Reason to Buy Netflix Before July 16 - 24/7 Wall St.](https://247wallst.com/investing/2026/07/10/here-is-the-main-reason-to-buy-netflix-before-july-16/)
3. The Motley Fool — [1 Reason I'm Never Selling Netflix Stock](https://www.fool.com/investing/2026/04/25/1-reason-im-never-selling-netflix-stock/)
4. Business Insider — [Netflix Prices (2026): Monthly Cost for Every... - Business Insider](https://www.businessinsider.com/guides/streaming/netflix-price)
5. AOL — [3 Reasons to Buy Netflix Stock in June](https://www.aol.com/articles/3-reasons-buy-netflix-stock-172500326.html)

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Cite as: TrendWatcher, "Netflix stock looks cheap ahead of July 16 earnings report", https://www.trendwatcher.in/article/d1a0d38a-c7f3-4851-927b-2109e6bd9664