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Chicago, IL – August 5, 2025 – Zacks Equity Research shares Netflix, Inc. NFLX as the Bull of the Day and Badger Meter, Inc. BMI as the Bear of the Day. In addition, Zacks Equity Research provides analysis on McDonald's Corp. MCD, Darden Restaurants, Inc. DRI and Yum China Holdings, Inc. YUMC.
Here is a synopsis of all five stocks.
Investors can buy Netflix, Inc. stock roughly 15% below its all-time highs and at some of its most oversold RSI levels over the past few years to start August.
Netflix easily outperformed the stock market and the Tech sector over the last several years, without the benefit of artificial intelligence euphoria. The streaming TV and technology giant is also far less exposed to potential tariff and trade war setbacks compared to many of its big tech peers.
Wall Street took profits on Netflix stock throughout July after its furious first-half rally that’s part of a 550% surge off its summer 2022 lows. Despite this charge, and its massive long-term outperformance, Netflix offers investors great value.
Investors sold the news after the streamer’s beat-and-raise second quarter earnings release on July 17, which confirmed Netflix’s robust growth outlook in a non-speculative and stable growth area of the economy that’s not reliant on the AI revolution.
This backdrop makes Netflix one of the best technology stocks to buy in the second half of 2025.
Netflix stock tumbled between November 2021 and July 2022 as Wall Street feared its growth days were numbered and that it wouldn’t be able to churn out huge profits like Apple and other mega-cap tech stocks.
That selloff seems like a lifetime ago. Netflix successfully addressed all of Wall Street’s worst fears and then some, helping the stock blow away all of the Magnificent 7 stocks outside of Nvidia during the past three years. More recently, NFLX has charged 95% higher in the last year, tripling the Zacks Tech sector.
NFLX rolled out a lower-cost, ad-supported subscription plan in the fall of 2022. Netflix has also successfully raised prices on its top-tier premium plans while remaining one of the best deals in streaming TV for ad-based plans compared to Disney and other rivals. And the company effectively cracked down on account sharing to help boost user growth.
Netflix added 18.9 million paid subscriptions in Q4 2024, marking its largest quarter of net adds on record, topping the Covid-lockdown surge. It closed 2024 with 301.63 million global paid memberships, up 16% year-over-year. NFLX announced last April that it would stop disclosing subscriber growth each quarter starting with the first quarter of 2025, though it will publicize major milestones.
The company effectively streamlined its operations, grew its user base, rolled out more content, and, most importantly, expanded its bottom line. Netflix has also improved its balance sheet, and its board authorized an additional $15 billion stock buyback program in early 2025.
On a macro level, Netflix doesn’t need to spend billions of dollars on data centers or other AI-focused growth efforts to thrive. On a speculative note, NFLX could be due for a stock split, with it trading at around $1,170 a share.
Netflix completely transformed Hollywood entertainment and television over the last 15-plus years, turning it into one of the biggest winners on Wall Street. The company remains near the top of the crowded streaming industry despite growing challenges from deep-pocketed rivals such as Apple and Amazon, and heavy investments from Disney and other traditional titans.
NFLX’s successful expansion into big-budget blockbuster movies and TV and reality TV are helping it thrive as the U.S. and the world cut the cord for good. Live sports were the last hope for linear TV and the biggest market for television advertising.
Yet Disney is launching a full-scale direct-to-consumer streaming version of ESPN in the fall at a $29.99 per month price point. Netflix already made its way into live sports, landing deals with the NFL, WWE, boxing, and more. On top of that, it's rolling out more video game content to make it as close to a one-stop entertainment shop as possible.
There is growing speculation that Netflix will experiment with user-generated content to help compete against YouTube, which owns the largest share of TV viewing (12%), according to Nielsen, ahead of Disney, Paramount, NBC Universal, and Netflix.
NFLX topped our Q2 earnings estimate on July 17 and provided upbeat guidance, with its FY26 consensus up over 5% since then. The company’s recently improving earnings outlook earns Netflix a Zacks Rank #1 (Strong Buy) and extends its impressive run of upward earnings revisions.
The company confirmed last quarter its plans to “roughly double ads revenue in 2025.” Separately, The Wall Street Journal reported earlier this year that Netflix is aiming to double its annual revenue by 2030.
In the short run, NFLX is projected to increase its revenue by 16% in 2025 and 13% next year to reach nearly $51 billion, doubling its 2020 total.
The streaming company more than tripled its earnings between 2020 and 2024. Netflix is expected to grow its EPS by another 31% in 2025 and 23% in FY26, following 65% growth last year. The company is targeting a 29.5% operating margin for 2025, up from 26.8% last year.
Netflix was one of the best-performing stocks of the 2010s, and it is up 260% since the start of 2020 to outpace Tech’s 150%. It soared 415% in the last three years and 550% from its 2022 lows, leaving all of the Magnificent 7 (outside of Nvidia) in the dust.
Despite its roughly 15% drop from its June 30 peaks, NFLX is still up 30% in 2025 vs. Tech’s 9%. The pullback over the last month has it trading at some of its lowest RSI levels over the past five years, down from some of its highest.
The stock is trying to hold its ground near its late April/early May breakout levels and its long-term 21-week moving average.
Any drop to Netflix's 200-day would likely represent an even better buying opportunity. But playing the market timing game is no easy task.
Netflix's pullback might not last much longer since it trades at more than a 90% discount to its 10-year highs and 31% below its 10-year median at 39X forward earnings.
On the price-to-earnings-to-growth (PEG) ratio front, Netflix trades in line with Tech at 1.7 despite its massive outperformance and nearly 60% below its five-year highs. Disney's PEG ratio sits at 1.6, yet DIS stock climbed just 14% in the past 10 years.
Badger Meter, Inc. stock tanked after its second quarter earnings release on July 22.
Wall Street is worried about the water management solutions firm’s slowing growth outlook and the negative impact of tariffs and other near-term headwinds.
Badger Meter’s flow measurement, water quality, and control products serve water utilities, municipalities, and commercial and industrial customers worldwide. The company’s high-tech smart water metering solutions empower its customers to optimize the delivery and use of water to maximize revenue and reduce waste.
Badger Meter’s offerings aren’t flashy. But its essential water-focused tech is growing in popularity as the U.S. and countries around the world spend heavily on water preservation at every level.
Badger Meter posted rather steady revenue growth over the last 25 years, including 18% average sales growth between 2021 and 2024. Despite this tough to compete against stretch for the water technology firm, BMI is projected to grow its sales by another 11% in 2025 and 8% next year.
Along with its strong sales growth came an earnings boom, including 35% expansion in 2024 and 38% in 2023. But its earnings revisions are trending in the wrong direction in 2025, with its outlook fading again following its downbeat Q2 release that saw its EPS expand by just 4%.
BMI pointed to “certain tariff-related cost pressures” as part of the reasons for its disappointing guidance. Wall Street also wasn’t pleased to see that “total Selling, Engineering and Administration (SEA) expenses increased year-over-year by $9.1 million to $52.9 million, due primarily to the addition of SmartCover.” Its operating profit margins slipped from 19.2% in the year-ago period to 18.8% in Q2.
Badger Meter’s FY26 earnings estimate is down over 5% since its Q2 release, with its Q3 outlook 8% lower. The downbeat EPS revisions trend earns the stock a Zacks Rank #5 (Strong Sell) right now.
BMI stock is up 190% in the last five years to outpace its sector’s 110%, and it blew away the S&P 500 over the last 15 years.
Some investors might be tempted to buy the dip here. Yet it could be wise to wait for Badger Meter to prove its earnings revisions are ready to start trending in the right direction.
McDonald's Corp. is slated to release second-quarter 2025 results on Aug. 6, before the opening bell.
In the last reported quarter, the company’s earnings beat the Zacks Consensus Estimate by 1.1%. MCD surpassed earnings estimates in two of the trailing four quarters, missed once and met once. The average miss over this period is 0.2%, as shown in the chart below.
The Zacks Consensus Estimate for second-quarter earnings per share (EPS) has increased to $3.15 from $3.14 in the past 30 days. The estimated figure indicates a 6.1% increase from the year-ago EPS of $2.97. The consensus mark for revenues is pegged at $6.71 billion, indicating 3.5% year-over-year growth.
Our proven model predicts an earnings beat for McDonald's this time around. The combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) increases the odds of an earnings beat.
Earnings ESP: McDonald's has an Earnings ESP of +0.43%. You can uncover the best stocks to buy or sell before they are reported with our Earnings ESP Filter.
Zacks Rank: The company carries a Zacks Rank #3 at present.
You can see the complete list of today’s Zacks #1 Rank stocks here.
McDonald’s top-line performance in second-quarter 2025 is likely to have been driven by continued momentum in global comparable sales growth, supported by consistent customer traffic, menu innovation and digital engagement. The company’s strategic focus on core menu items such as burgers, chicken and coffee is likely to have resonated well with consumers, particularly in a value-conscious environment.
Tailored marketing efforts, like the successful "As Featured In" meal campaigns and partnerships with global celebrities, likely attracted both loyal and new customers. International markets, especially those in Europe, probably contributed meaningfully to top-line gains as consumer confidence improved and McDonald’s value-focused positioning held strong against inflationary pressures.
Digital and delivery channels likely played a critical role in driving incremental sales. McDonald’s has continued to leverage its digital ecosystem, including its loyalty program, mobile app and delivery services, to strengthen customer frequency and order value. With more customers shifting to online and mobile ordering, the brand is likely to have witnessed increased average check sizes and better conversion rates. Altogether, these factors are likely to have helped offset macroeconomic headwinds and kept revenue growth on a solid footing.
On the bottom-line front, McDonald’s is likely to have been driven by operational efficiency initiatives and margin improvement strategies. The company’s ongoing focus on simplifying restaurant operations, optimizing supply-chain processes and modernizing store formats likely contributed to better cost control and productivity. Its asset-light franchised model continued to provide a buffer against rising input and labor costs, helping stabilize restaurant margins. Additionally, pricing actions taken earlier in the year were likely effective in protecting profitability without significantly impacting traffic.
However, continued macroeconomic uncertainties in some key international markets are likely to have affected consumer discretionary spending. Inflationary pressures, particularly in labor and commodities, are anticipated to have weighed on margins despite pricing efforts.
In the past year, the company has gained 12.8% compared with the Restaurant industry’s growth of 8.7%. The stock has also underperformed the S&P 500’s rally of 20.8%. Other industry players like Darden Restaurants, Inc. and Yum China Holdings, Inc. have gained 44.4% and 56.7%, respectively.
Let us assess the value MCD offers to investors at its current levels.
From the valuation point of view, the stock is trading at a discount. MCD’s forward 12-month price-to-earnings ratio stands at 23.56, lower than the industry’s ratio of 24.72.
Given McDonald’s steady performance and resilient business model, existing investors may choose to hold on to the stock, but fresh buying should be approached with caution for now.
While the company continues to benefit from strong digital growth, menu innovation and operational efficiencies, near-term upside may be limited amid macroeconomic headwinds and its recent underperformance relative to broader market indices. Waiting for clearer signals from the upcoming earnings report or a more attractive entry point may offer a better risk-reward balance for new investors.
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This article originally published on Zacks Investment Research (zacks.com).
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