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Have you ever experienced the regret of an expensive purchase and the sinking feeling that follows? Overvalued stocks can provoke the same emotions. When a stock’s price far exceeds its fundamental earnings and revenue, or it boasts a high P/E ratio compared to its peers, it may raise questions. In this article, we explore whether Netflix, Inc. (NFLX) fits this description, and the reasons behind it. Will it turn out to be overvalued?

In this article, we dive into why Netflix, Inc. could be considered overvalued as of November 25, 2025, based on AAII’s Value Score and Grade.

Key takeaways:

Comparing potential overvaluations in the Entertainment sector
Utilizing the AAII Value Score and Grade to evaluate if (NFLX) is overvalued
The reasons why Netflix, Inc. might be overvalued: an analysis of key metrics

What Is an Overvalued Stock?

Overvalued stocks arise from high expectations, past growth, and demand. Investors compare them with peers but not all are bad investments. Factors like reversion to mean and analyst expectations affect price volatility. Despite risks, growth investors may find some appealing for long-term potential. Effective methods exist to identify overvalued stocks.

How to Use the AAII Value Grade to Screen for Overvalued Stocks

The AAII Value Grade combines six key valuation metrics, including P/S ratio, P/E ratio, EV/EBITDA ratio, shareholder yield, P/B ratio, and P/FCF ratio. AAII members use this composite valuation to find cheap or expensive stocks, with grades ranging from A to F. Stocks are ranked based on percentile rankings for each metric, and the average ranking places them in quintiles from cheapest (A grade) to most expensive (F grade). Follow this link to learn more about AAII’s Value Score and Grade. Subscribe to A+ Investor 100% risk free with our 90-day money-back guarantee.

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Netflix, Inc.’s Value Grade

Value Grade:

Metric	Rank	NFLX	Sector Median
Price/Sales	89	10.26	0.90
Price/Earnings	82	43.6	16.1
EV/EBITDA	86	30.7	9.9
Shareholder Yield	38	0.9%	(0.2%)
Price/Book Value	94	17.03	1.56
Price/Free Cash Flow	81	49.7	12.3

As of November 25, 2025, Netflix, Inc. has a price-to-sales ratio of 10.26, which is 886.5% higher than the industry median at 1.04. Its price-earnings ratio is 43.6 and its EV/EBITDA ratio is 30.7.

Netflix, Inc.’s shareholder yield is 0.9%, higher than the Entertainment industry average at -1.1%.

Finally, its price-to-book ratio is 17.03. and its price-to-free-cash-flow ratio is 49.7. Stocks with a Value Score from 0 to 20 are considered deep value, those with a score between 21 and 40 are considered a value and so on.

Netflix, Inc.’s Value Score is 9, which translates to a Value Grade of F and is considered to be Ultra Expensive.

What Investors Should Know About Netflix, Inc. (NFLX) Valuation

Valuation assessments often vary, but the AAII Stock Grades offer a consistent method for evaluating stocks. The chart provided above allows you to compare the valuation metrics of Netflix, Inc. against the industry median, giving you a clear perspective on how it stands in comparison.

Data as of November 25, 2025. By considering these metrics, we determine if a stock is under/overvalued. In this case, the composite score shows that Netflix, Inc. is Ultra Expensive at this time.

AAII is not a registered investment adviser or a broker/dealer. Readers are advised that articles are provided solely for informational purposes and should not be construed as an offer to sell or the solicitation of an offer to buy securities. Read the full AAII disclaimer.