NASDAQ:NTES is an undervalued gem with solid fundamentals.

Last update: Jan 17, 2024

Uncover the hidden value in NETEASE INC-ADR (NASDAQ:NTES) as our stock screening tool recommends it as an undervalued choice. NASDAQ:NTES maintains a robust financial position and offers an attractive pricing perspective. Let's dig deeper into the analysis.

Deciphering NASDAQ:NTES's Valuation Rating

ChartMill assigns a Valuation Rating to each stock, ranging from 0 to 10. This rating is calculated by analyzing different valuation elements, such as price to earnings and free cash flow, both in absolute terms and relative to the market and industry. In the case of NASDAQ:NTES, the assigned 8 reflects its valuation:

Compared to the rest of the industry, the Price/Earnings ratio of NTES indicates a rather cheap valuation: NTES is cheaper than 89.19% of the companies listed in the same industry.
The average S&P500 Price/Earnings ratio is at 25.68. NTES is valued slightly cheaper when compared to this.
NTES's Price/Forward Earnings ratio is rather cheap when compared to the industry. NTES is cheaper than 85.14% of the companies in the same industry.
When comparing the Price/Forward Earnings ratio of NTES to the average of the S&P500 Index (20.65), we can say NTES is valued slightly cheaper.
Based on the Enterprise Value to EBITDA ratio, NTES is valued a bit cheaper than the industry average as 78.38% of the companies are valued more expensively.
85.14% of the companies in the same industry are more expensive than NTES, based on the Price/Free Cash Flow ratio.
NTES's low PEG Ratio(NY), which compensates the Price/Earnings for growth, indicates a rather cheap valuation of the company.
NTES has an outstanding profitability rating, which may justify a higher PE ratio.
NTES's earnings are expected to grow with 18.85% in the coming years. This may justify a more expensive valuation.

How do we evaluate the Profitability for NASDAQ:NTES?

Discover ChartMill's exclusive Profitability Rating, a proprietary metric that assesses stocks on a scale of 0 to 10. It takes into consideration various profitability ratios and margins, both in absolute terms and relative to industry peers. Notably, NASDAQ:NTES has achieved a 8:

NTES's Return On Assets of 15.61% is amongst the best of the industry. NTES outperforms 98.65% of its industry peers.
With an excellent Return On Equity value of 22.33%, NTES belongs to the best of the industry, outperforming 91.89% of the companies in the same industry.
NTES's Return On Invested Capital of 14.53% is amongst the best of the industry. NTES outperforms 94.59% of its industry peers.
The 3 year average ROIC (10.68%) for NTES is below the current ROIC(14.53%), indicating increased profibility in the last year.
The Profit Margin of NTES (26.35%) is better than 98.65% of its industry peers.
NTES has a Operating Margin of 24.86%. This is amongst the best in the industry. NTES outperforms 98.65% of its industry peers.
NTES has a better Gross Margin (58.50%) than 75.68% of its industry peers.

Assessing Health for NASDAQ:NTES

ChartMill utilizes a Health Rating to assess stocks, scoring them on a scale of 0 to 10. This rating takes into account a variety of liquidity and solvency ratios, both in absolute terms and in comparison to industry peers. NASDAQ:NTES has earned a 7 out of 10:

NTES has a debt to FCF ratio of 0.41. This is a very positive value and a sign of high solvency as it would only need 0.41 years to pay back of all of its debts.
Looking at the Debt to FCF ratio, with a value of 0.41, NTES belongs to the top of the industry, outperforming 94.59% of the companies in the same industry.
NTES has a Debt/Equity ratio of 0.10. This is a healthy value indicating a solid balance between debt and equity.
NTES has a Debt to Equity ratio of 0.10. This is in the better half of the industry: NTES outperforms 72.97% of its industry peers.
NTES has a Current Ratio of 2.91. This indicates that NTES is financially healthy and has no problem in meeting its short term obligations.
Looking at the Current ratio, with a value of 2.91, NTES belongs to the top of the industry, outperforming 82.43% of the companies in the same industry.
A Quick Ratio of 2.89 indicates that NTES has no problem at all paying its short term obligations.
The Quick ratio of NTES (2.89) is better than 82.43% of its industry peers.

How We Gauge Growth for NASDAQ:NTES

ChartMill assigns a Growth Rating to every stock. This score ranges from 0 to 10 and evaluates the different growth aspects like EPS and Revenue, both in the past as in the future. NASDAQ:NTES scores a 6 out of 10:

NTES shows a strong growth in Earnings Per Share. In the last year, the EPS has been growing by 24.56%, which is quite impressive.
Measured over the past years, NTES shows a quite strong growth in Earnings Per Share. The EPS has been growing by 16.47% on average per year.
NTES shows quite a strong growth in Revenue. Measured over the last years, the Revenue has been growing by 16.78% yearly.
NTES is expected to show quite a strong growth in Earnings Per Share. In the coming years, the EPS will grow by 15.51% yearly.
Based on estimates for the next years, NTES will show a quite strong growth in Revenue. The Revenue will grow by 10.78% on average per year.

Our Decent Value screener lists more Decent Value stocks and is updated daily.

Our latest full fundamental report of NTES contains the most current fundamental analsysis.

Keep in mind

This is not investing advice! The article highlights some of the observations at the time of writing, but you should always make your own analysis and invest based on your own insights.