Netflix Operating Margin Reaches 29.7%, EPS Grows 49.6%
WBD•Netflix's operating margin climbed from 16.8% three years ago to 29.7% over the last twelve months, fueling an EPS compound annual growth rate of about 49.6% despite revenue growth of 13.7%. The stock trades at a P/E of 25.8, near the bottom of its ten-year 15.3–285.0 range, reflecting undervalued profitability strength.
1. Operating Margin Expansion
Netflix’s operating margin rose steadily from 16.8% three years ago to 29.7% over the last twelve months, reflecting increased operating leverage as fixed content and platform costs are spread over higher revenue.
2. Profitability Versus Revenue Growth
Over the past three years, Netflix delivered a 49.6% annual EPS compound growth rate while revenue grew 13.7%, demonstrating how margin improvements can drive outsized bottom-line gains even if sales growth is moderate.
3. Valuation Context
With a P/E ratio of 25.8, near the low end of its ten-year 15.3–285.0 range, Netflix appears to trade at a discount to its profitability trajectory, suggesting the market may be underappreciating its compounding earnings potential.
