Could an acquisition of $ROKU help bring Netflix $NFLX back into favor with investors? Let's take a closer look!

Over the last two years, both stocks have seen their gross margins increase. This is typically a good sign for the health of a stock.

Unlike gross margins, revenue growth has been slowing. This has been one of the main red flags associated with the sell-off in both stocks.

As it stands, Netflix is 8x the size of Roku, which has an enterprise value of $12B.

Netflix currently has $6B in cash on its balance sheet, allowing it to pay for half of the proposed acquisition.

Netflix generated $802m in FCF last quarter. This means Roku costs them 15.1 quarters or almost four years of cash flow.