Netflix vs. Roku: Which Streaming Stock is the Better Buy-the-Dip Target?
Two appealing buy-the-dip prospects that investors may be taking notice of are streaming services leaders Netflix NFLX and Roku ROKU.
Notably, Netflix stock has fallen 30% to under $80 a share since implementing a 10-1 stock split in November to make shares more affordable to employees regarding its stock-based compensation (SBC) programs.
Meanwhile, Roku shares now cost more than Netflix at around $90, but are more than 20% from a 52-week high of $116.
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Netflix & Roku Overview Reminder
Netflix and Roku feel like they live in the same universe because both are tied to streaming, but they actually play very different roles in the ecosystem. Think of Netflix as the content, and Roku as the infrastructure that helps you access lots of content.
Netflix is a content creator and subscription streaming service with a moat that comes from exclusive originals with global scale, while Roku is a platform and operating system for streaming devices and smart TVs that aggregates thousands of channels and apps, including Netflix.
Tracking Netflix & Roku’s Expansion
Having a layered strategy revolving around content, technology, pricing, and global reach, Netflix’s annual sales are projected to exceed $50 billion this year. Although Netflix’s captivating growth has begun to slow, a 13% increase is expected from sales of $45.18 billion in 2025. Plus, Netflix’s top line is projected to stretch another 12% in FY27 to $57.22 billion.
One of Netflix’s most impactful recent moves was launching ad-supported subscription plans in multiple countries. Operating in nearly 200 countries, Netflix now has more than 200 million international subscribers and remains the largest global streaming service.
Netflix also remains the frontrunner to expand its streaming services by acquiring Warner Bros. Discovery WBD., even with Paramount Skydance PSKY getting a new window to make its best and final offer.
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Similarly, Roku’s rise has been attributed to a blended strategy that includes advertising growth and international expansion, lifting its strategic positioning in the streaming ecosystem. Carving out a unique niche as a neutral platform that isn’t tied to a single content ecosystem, Roku is referred to as the “Switzerland” of streaming.
Roku’s neutrality makes its platform and tv’s attractive to both consumers and content providers. To that point, Roku controls about 50% of the streaming operating systems (OS) market. Furthermore, Roku’s biggest growth engine is no longer hardware, with its platform revenue being propelled by advertising partnerships, including with Amazon AMZN.
Roku’s annual sales are projected to be up 16% in FY26 and are forecasted to increase another 13% in FY27 to $6.22 billion.
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EPS Growth & Revisions
With Netflix being the larger, more mature company, its annual earnings are expected to increase by a respectable 20% for the foreseeable future.
Netflix’s EPS projections are edging toward $4.00, with it noteworthy that the 10-1 stock split lowered its earnings per share but does not impact a company’s actual net income.
However, following Netflix’s stock split, FY26 & FY27 EPS revisions are modestly lower after initially seeing an uptick but falling over the last 30 days. The dip comes as Netflix slightly edged Q4 EPS expectations in January, but the market viewed the quarterly results as somewhat underwhelming.
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Roku, on the other hand, has seen a compelling trend of positive EPS revisions since crushing its Q4 EPS expectations by an eye-catching 89% last Thursday. In the last week, Roku’s FY26 and FY27 EPS estimates have skyrocketed 60% and 39%, respectively.
Resurging past the probability line after going public in 2017, Roku’s EPS is now expected at $2.03 in FY26, a 244% spike from $0.59 per share last year. Even better, FY27 EPS is now projected to leap another 58% to $3.20.
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Bottom Line
Long-term investors may still be more inclined to consider Netflix stock at a very reasonable 24X forward earnings multiple compared to Roku’s 43X. That said, Roku’s compelling trend of positive EPS revisions does support more short-term upside.
Roku has also grown into what was a much loftier valuation, similar to what Netflix has done in recent years. At the moment, Roku stock sports a Zacks Rank #1 (Strong Buy) with Netflix shares landing a Zack Rank #3 (Hold).
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Netflix, Inc. (NFLX) : Free Stock Analysis Report
Roku, Inc. (ROKU) : Free Stock Analysis Report
Amazon.com, Inc. (AMZN) : Free Stock Analysis Report
Warner Bros. Discovery, Inc. (WBD) : Free Stock Analysis Report
Paramount Skydance Corporation (PSKY) : Free Stock Analysis Report
This article originally published on Zacks Investment Research (zacks.com).
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.
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