Apple Inc. (AAPL)vs Netflix, Inc. (NFLX)

Quick verdict

Apple and Netflix both hold high-quality style tags but present different profiles. Apple trades at a trailing P/E of 40.26 and forward P/E of 26.84, while Netflix trades at 21.82 trailing and 32.49 forward, with a PEG of 0.64 versus Apple's 1.39, indicating Netflix's near-term earnings growth is priced more moderately relative to its expansion rate. Apple's profitability metrics are markedly stronger, with ROE of 146.69% and ROIC of 49.57% versus Netflix's 47.92% and 24.36% respectively. Netflix has delivered stronger recent price performance, up 106.6% over one year against Apple's 73.53%, but has also suffered a steeper five-year maximum drawdown of -57.42% compared with Apple's -19.47%. The overall scoring favours Netflix (5) over Apple (1), while Apple retains the 'quality' best-for tag and Netflix is favoured for value, growth and income.

2-year relative performance

At-a-glance comparison

Business model and revenue mix

Apple designs, manufactures and sells consumer electronics including iPhone, Mac and wearables, supported by a growing services ecosystem, and is classified within Consumer Electronics under the Technology sector. Netflix operates as a global subscription entertainment provider within the Communication Services sector, generating revenue primarily through content licensing and streaming subscriptions. Both companies report broadly comparable gross margins, with Apple at 47.86% and Netflix at 49.03%, indicating similarly efficient core economics despite operating in different sectors. Apple's market capitalisation of approximately $4.9 trillion dwarfs Netflix's $290 billion, reflecting Apple's larger scale, diversified hardware-plus-services model versus Netflix's narrower but globally scaled content subscription business.

Valuation

On trailing earnings, Netflix appears cheaper with a P/E of 21.82 versus Apple's 40.26, though on a forward basis this reverses somewhat, with Netflix at 32.49 against Apple's 26.84, suggesting the market anticipates faster near-term earnings growth for Netflix. Netflix's PEG ratio of 0.64 is notably lower than Apple's 1.39, implying its valuation is more moderately priced relative to expected growth. Price-to-sales further differentiates the two, with Apple at 10.86 versus Netflix's 6.19, while Apple's price-to-book of 46.1 vastly exceeds Netflix's 9.35, partly a function of Apple's smaller equity base relative to its earnings power. EV/EBITDA also favours Netflix at 9.66 versus Apple's 30.87. Both carry a 'B' valuation verdict.

Growth profile

Apple's revenue CAGR figures show 6.43% over three years but 29.32% over five years, indicating an uneven growth trajectory, while Netflix shows steadier revenue expansion at 15.85% (3-year) and 16.79% (5-year). On earnings, Apple's EPS CAGR of 22.59% (3-year) and 39.1% (5-year) outpaces Netflix's 27.09% (3-year) and 14.39% (5-year) over the longer horizon but trails over three years. Both companies share a 'B' growth verdict, reflecting comparable but differently shaped growth profiles: Apple's five-year figures benefit from a low earlier base and services expansion, while Netflix shows more consistent subscriber and revenue-driven growth across both periods.

Profitability and quality

Apple demonstrates superior profitability across nearly all measures, with an operating margin of 32.64% versus Netflix's 29.72%, and a net margin of 27.15% against 28.52%, the latter marginally favouring Netflix. The starkest contrast is in capital efficiency: Apple's ROE of 146.69% dwarfs Netflix's 47.92%, and its ROIC of 49.57% comfortably exceeds Netflix's 24.36%. Gross margins are closely matched at 47.86% (Apple) versus 49.03% (Netflix). Despite Apple's quantitative edge in returns on capital, both companies carry an overall 'A' quality verdict, and Apple is specifically flagged as best-for 'quality' among the two.

Balance-sheet risk

Apple holds cash of approximately $67.9 billion against total debt of $76.2 billion, with a net debt/EBITDA ratio of -1.5 and a current ratio of 1.07. Netflix holds larger cash reserves of $79.9 billion but also higher total debt of $115.7 billion, with a net debt/EBITDA of -0.82 and a similar current ratio of 1.14. Interest coverage strongly favours Netflix at 21.13 times versus Apple's 3.19 times, indicating Netflix's earnings comfortably cover interest obligations by a wider margin. Both companies carry a 'B' balance sheet verdict, reflecting broadly comparable overall financial structuring despite differing debt servicing capacity.

Price performance and shareholder returns

Netflix has outperformed Apple across most recent return periods, posting a one-year return of 106.6% versus Apple's 73.53%, a three-year annualised return of 38.86% versus 27.16%, and a five-year annualised return of 30.63% versus Apple's -0.6%. Year-to-date, Netflix is also ahead at 45% versus Apple's 58.09%, where Apple actually leads. Netflix's higher beta of 1.517 versus Apple's 1.097 and its steeper five-year maximum drawdown of -57.42% (versus Apple's -19.47%) indicate materially higher volatility accompanying these returns. Both stocks share a 'B' momentum verdict despite these differing risk-return characteristics.

Which stock fits which investor

Investors prioritising capital efficiency and profitability metrics may note Apple's higher ROE (146.69%) and ROIC (49.57%), alongside its lower five-year drawdown (-19.47%), consistent with its 'best for quality' designation. Those focused on valuation-conscious growth exposure may observe Netflix's lower PEG (0.64) and stronger interest coverage (21.13x), aligning with its 'best for value, growth and income' tags. Netflix's higher beta (1.517) and larger historical drawdown (-57.42%) indicate greater price volatility, which may be a relevant consideration depending on risk tolerance. This is not investment advice.

• Value: NFLX
• Growth: NFLX
• Income: NFLX
• Quality: AAPL

Frequently asked questions

Which company has the higher valuation?

On a trailing basis, Apple's P/E of 40.26 is higher than Netflix's 21.82. However, on forward earnings, Netflix's P/E of 32.49 exceeds Apple's 26.84, and Apple's price-to-book of 46.1 is substantially higher than Netflix's 9.35.

Which company is more profitable?

Apple shows stronger capital returns, with ROE of 146.69% and ROIC of 49.57%, compared with Netflix's 47.92% and 24.36% respectively, though net margins are close, at 27.15% for Apple versus 28.52% for Netflix.

Which stock has performed better recently?

Netflix has delivered stronger one-year (106.6% vs 73.53%), three-year annualised (38.86% vs 27.16%), and five-year annualised (30.63% vs -0.6%) returns than Apple, though Apple leads year-to-date at 58.09% versus Netflix's 45%.

Which company carries more balance sheet risk?

Netflix carries higher total debt ($115.7 billion vs $76.2 billion) but also much stronger interest coverage (21.13x vs 3.19x), while both hold similar current ratios (1.14 vs 1.07) and share a 'B' balance sheet verdict.

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