Investors should take notice of NASDAQ:NTES—it offers a great deal for the fundamentals it presents.

Uncover the potential of NETEASE INC-ADR (NASDAQ:NTES) as our stock screener's choice for an undervalued stock. NASDAQ:NTES maintains a strong financial position and offers an appealing valuation. We'll delve into the specifics below.

Deciphering NASDAQ:NTES's Valuation Rating

ChartMill employs its own Valuation Rating system for all stocks. This score, ranging from 0 to 10, is determined by evaluating different valuation factors, including price to earnings and free cash flow, both in absolute terms and relative to the market and industry. NASDAQ:NTES has earned a 7 for valuation:

• Compared to the rest of the industry, the Price/Earnings ratio of NTES indicates a rather cheap valuation: NTES is cheaper than 85.14% of the companies listed in the same industry.
• NTES's Price/Earnings ratio indicates a valuation a bit cheaper than the S&P500 average which is at 26.04.
• Compared to the rest of the industry, the Price/Forward Earnings ratio of NTES indicates a rather cheap valuation: NTES is cheaper than 85.14% of the companies listed in the same industry.
• Compared to an average S&P500 Price/Forward Earnings ratio of 21.61, NTES is valued a bit cheaper.
• Based on the Enterprise Value to EBITDA ratio, NTES is valued a bit cheaper than the industry average as 79.73% of the companies are valued more expensively.
• Based on the Price/Free Cash Flow ratio, NTES is valued cheaply inside the industry as 82.43% of the companies are valued more expensively.
• The low PEG Ratio(NY), which compensates the Price/Earnings for growth, indicates a rather cheap valuation of the company.
• The decent 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.

Profitability Analysis for NASDAQ:NTES

ChartMill employs its own Profitability Rating system for stock evaluation. This score, ranging from 0 to 10, is derived from an analysis of diverse profitability metrics and margins. In the case of NASDAQ:NTES, the assigned 7 is noteworthy for profitability:

• With an excellent Return On Assets value of 15.61%, NTES belongs to the best of the industry, outperforming 98.65% of the companies in the same industry.
• 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.
• The Return On Invested Capital of NTES (14.53%) is better than 94.59% of its industry peers.
• The last Return On Invested Capital (14.53%) for NTES is above the 3 year average (10.68%), which is a sign of increasing profitability.
• The Profit Margin of NTES (26.35%) is better than 97.30% of its industry peers.
• NTES's Operating Margin of 24.86% is amongst the best of the industry. NTES outperforms 97.30% of its industry peers.
• NTES has a better Gross Margin (58.50%) than 74.32% of its industry peers.

Exploring NASDAQ:NTES's Health

ChartMill assigns a proprietary Health Rating to each stock. The score is computed by evaluating various liquidity and solvency ratios and ranges from 0 to 10. NASDAQ:NTES was assigned a score of 7 for health:

• 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 93.24% of its industry peers.
• A Debt/Equity ratio of 0.10 indicates that NTES is not too dependend on debt financing.
• Looking at the Debt to Equity ratio, with a value of 0.10, NTES is in the better half of the industry, outperforming 70.27% of the companies in the same industry.
• 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.
• The Current ratio of NTES (2.91) is better than 82.43% 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.
• The Quick ratio of NTES (2.89) is better than 82.43% of its industry peers.

Growth Analysis 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.
• Measured over the past years, NTES shows a quite strong growth in Revenue. The Revenue has been growing by 16.78% on average per year.
• 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.
• 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.

More Decent Value stocks can be found in our Decent Value screener.

Check the latest full fundamental report of NTES for a complete fundamental analysis.

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.