NASDAQ:NTES is not too expensive for the growth it is showing.

Last update: Feb 1, 2024

Discover NETEASE INC-ADR (NASDAQ:NTES), an undervalued growth gem identified by our stock screener. NASDAQ:NTES is shining in terms of growth metrics, and it's also displaying strong financial health and profitability. What's more, it retains an appealing valuation. We'll break it down further.

ChartMill's Evaluation of Growth

Every stock receives a Growth Rating from ChartMill, ranging from 0 to 10. This rating assesses various growth aspects, including historical and projected EPS and revenue growth. NASDAQ:NTES boasts a 8 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.
The Earnings Per Share has been growing by 16.47% on average over the past years. This is quite good.
NTES shows quite a strong growth in Revenue. Measured over the last years, the Revenue has been growing by 16.78% yearly.
Based on estimates for the next years, NTES will show a quite strong growth in Earnings Per Share. The EPS will grow by 15.51% on average per year.
NTES is expected to show a strong growth in Revenue. In the coming years, the Revenue will grow by 64.92% yearly.
When comparing the Revenue growth rate of the last years to the growth rate of the upcoming years, we see that the growth is accelerating.

Valuation Insights: NASDAQ:NTES

ChartMill provides a Valuation Rating to every stock, ranging from 0 to 10. This rating assesses various valuation aspects, comparing price to earnings and cash flows, while considering factors like profitability and growth. NASDAQ:NTES boasts a 8 out of 10:

NTES's Price/Earnings ratio is rather cheap when compared to the industry. NTES is cheaper than 86.30% of the companies in the same industry.
The average S&P500 Price/Earnings ratio is at 25.93. NTES is valued slightly cheaper when compared to this.
86.30% of the companies in the same industry are more expensive than NTES, based on the Price/Forward Earnings ratio.
Compared to an average S&P500 Price/Forward Earnings ratio of 21.16, NTES is valued a bit cheaper.
NTES's Enterprise Value to EBITDA ratio is a bit cheaper when compared to the industry. NTES is cheaper than 76.71% of the companies in the same industry.
84.93% of the companies in the same industry are more expensive than NTES, based on the Price/Free Cash Flow ratio.
The low PEG Ratio(NY), which compensates the Price/Earnings for growth, indicates a rather cheap valuation of the company.
The excellent profitability rating of NTES may justify a higher PE ratio.
A more expensive valuation may be justified as NTES's earnings are expected to grow with 18.93% in the coming years.

Understanding NASDAQ:NTES's Health

To gauge a stock's financial health, ChartMill utilizes a Health Rating on a scale of 0 to 10. This comprehensive evaluation encompasses liquidity and solvency, 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.
NTES's Debt to FCF ratio of 0.41 is amongst the best of the industry. NTES outperforms 94.52% of its industry peers.
A Debt/Equity ratio of 0.10 indicates that NTES is not too dependend on debt financing.
The Debt to Equity ratio of NTES (0.10) is better than 73.97% of its industry peers.
A Current Ratio of 2.91 indicates that NTES has no problem at all paying its short term obligations.
The Current ratio of NTES (2.91) is better than 84.93% of its industry peers.
NTES has a Quick Ratio of 2.89. This indicates that NTES is financially healthy and has no problem in meeting its short term obligations.
NTES has a better Quick ratio (2.89) than 84.93% of its industry peers.

What does the Profitability looks like for NASDAQ:NTES

ChartMill assigns a Profitability Rating to every stock. This score ranges from 0 to 10 and evaluates the different profitability ratios and margins, both absolutely, but also relative to the industry peers. NASDAQ:NTES scores a 8 out of 10:

NTES has a better Return On Assets (15.61%) than 98.63% of its industry peers.
NTES has a better Return On Equity (22.33%) than 90.41% of its industry peers.
NTES has a Return On Invested Capital of 14.53%. This is amongst the best in the industry. NTES outperforms 95.89% 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.
NTES has a Profit Margin of 26.35%. This is amongst the best in the industry. NTES outperforms 98.63% of its industry peers.
The Operating Margin of NTES (24.86%) is better than 97.26% of its industry peers.
With a decent Gross Margin value of 58.50%, NTES is doing good in the industry, outperforming 75.34% of the companies in the same industry.

Our Affordable Growth screener lists more Affordable Growth stocks and is updated daily.

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

Keep in mind

This article should in no way be interpreted as advice in any way. The article is based on the observed metrics at the time of writing, but you should always make your own analysis and trade or invest at your own responsibility.