Amazon vs. Netflix

Well, it seems that Amazon (AMZN) is ready to enter into battle with Netflix (NFLX) in the streaming video arena. You can try to pick a winner, but in this book, they both seem expensive based on their fundamentals. I just wrote a post yesterday regarding the items to screen for when looking for stocks so let's put the research to work. Let's look at the numbers first:

NFLX is seen as having a bit more growth potential with a PEG of 1.69, but neither of them would show up in my screen as they are both over 1.5. Price/Sales and Price/Book are decidedly on AMZN side, but neither number would qualify them for my screen either! Price momentum on the other side would qualify only NFLX since I screen for 95% or over. 


Looking at other 2 ratios not used in my screen, but still useful, you can see that both have P/E that will be hard to justify in the coming years. Price to Cash Flow is way out of whack for Amazon (?) and a tad expensive for Netflix but not overly for a growth stock.


Overall, not a great picture! Both are definitely overpriced. But don't go shorting either one of them. AMZN has killed many shorts and NFLX is not a fun one to short either...


Keep in mind that NFLX uses AMZN infrastructure for streaming its video so in a sense, Amazon is already collecting a dime from Netflix every time you watch a rerun of Lost trying to figure out what you have missed!