Alphabet vs Netflix Which Is a Smarter Choice?

Alphabet and Netflix are two tech giants that have made a significant impact on the stock market in recent years. Alphabet, the parent company of Google, has long been a dominant force in the tech industry, with a strong focus on innovation and diverse revenue streams. On the other hand, Netflix has revolutionized the entertainment industry with its streaming platform and original content. Both companies have experienced impressive growth, but investors may be wondering which stock is the better investment in the long run. Let's take a closer look at the financial performance and potential future prospects of Alphabet and Netflix.

Alphabet or Netflix?

When comparing Alphabet and Netflix, different investors may prioritize various metrics based on their investment strategies and goals. So, ask yourself what type of investor you are. This will guide you in determining which metrics are most important for your investment decision between Alphabet and Netflix.

Dividend Investors:

Dividend investors look for stable and growing income streams, using dividend metrics to assess potential investments. A company's dividend yield essentially measures the size of its dividend relative to the total market value of the company. Alphabet has a dividend yield of 0.31%, while Netflix has a dividend yield of -%. Beyond the yield itself, considering the growth and sustainability of these dividends is also crucial. Alphabet reports a 5-year dividend growth of 0.00% year and a payout ratio of 5.22%. On the other hand, Netflix reports a 5-year dividend growth of 0.00% year and a payout ratio of 0.00%.

Value Investors:

Value investors focus on financial metrics to determine a stock's intrinsic value compared to its market value. The Price-to-Earnings (P/E) Ratio links stock price to a company's earnings per share, with Alphabet P/E ratio at 25.03 and Netflix's P/E ratio at 50.94. Another crucial valuation metric is the Price-to-Book (P/B) Ratio, which compares stock price with book value per share. Alphabet P/B ratio is 7.51 while Netflix's P/B ratio is 17.44.

Growth Investors:

Growth investors prioritize metrics indicative of a company's expansion potential. Focusing on top-line growth, Alphabet has seen a 5-year revenue growth of 1.47%, while Netflix's is 1.11%. Return on Equity (ROE) measures how effectively a company uses equity investment to generate earnings, with Alphabet's ROE at 31.66% and Netflix's ROE at 35.86%.

Retail Investors:

Retail investors often consider stock affordability and company familiarity. For example, day low prices are $193.29 for Alphabet and $922.60 for Netflix. Over the past year, Alphabet's prices ranged from $131.06 to $196.89, with a yearly change of 50.23%. Netflix's prices fluctuated between $461.86 and $941.75, with a yearly change of 103.90%. Brand recognition also plays a role, as familiarity with a company can influence investment decisions.