Despite its impressive fundamentals, NASDAQ:NTES remains undervalued.

Last update: Jun 14, 2024

Our stock screener has singled out NETEASE INC-ADR (NASDAQ:NTES) as a stellar value proposition. NASDAQ:NTES not only scores well in profitability, solvency, and liquidity but also maintains a very reasonable price point. We'll explore this further.

Understanding NASDAQ:NTES's Valuation

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 7 out of 10:

86.84% of the companies in the same industry are more expensive than NTES, based on the Price/Earnings ratio.
Compared to an average S&P500 Price/Earnings ratio of 28.56, NTES is valued rather cheaply.
The Price/Forward Earnings ratio is 11.47, which indicates a very decent valuation of NTES.
NTES's Price/Forward Earnings ratio is rather cheap when compared to the industry. NTES is cheaper than 84.21% of the companies in the same industry.
The average S&P500 Price/Forward Earnings ratio is at 20.00. NTES is valued slightly cheaper when compared to this.
Compared to the rest of the industry, the Enterprise Value to EBITDA ratio of NTES indicates a rather cheap valuation: NTES is cheaper than 82.89% of the companies listed in the same industry.
Based on the Price/Free Cash Flow ratio, NTES is valued cheaply inside the industry as 88.16% of the companies are valued more expensively.
The excellent profitability rating of NTES may justify a higher PE ratio.

Looking at the Profitability

ChartMill utilizes a Profitability Rating to assess stocks, scoring them on a scale of 0 to 10. This rating takes into account a variety of profitability ratios and margins, both in absolute terms and in comparison to industry peers. NASDAQ:NTES has earned a 9 out of 10:

NTES has a Return On Assets of 15.53%. This is amongst the best in the industry. NTES outperforms 97.37% of its industry peers.
The Return On Equity of NTES (23.80%) is better than 92.11% of its industry peers.
With an excellent Return On Invested Capital value of 14.55%, NTES belongs to the best of the industry, outperforming 93.42% of the companies in the same industry.
The last Return On Invested Capital (14.55%) for NTES is above the 3 year average (12.62%), which is a sign of increasing profitability.
With an excellent Profit Margin value of 28.78%, NTES belongs to the best of the industry, outperforming 97.37% of the companies in the same industry.
In the last couple of years the Profit Margin of NTES has grown nicely.
NTES has a Operating Margin of 26.70%. This is amongst the best in the industry. NTES outperforms 97.37% of its industry peers.
In the last couple of years the Operating Margin of NTES has grown nicely.
NTES's Gross Margin of 61.92% is fine compared to the rest of the industry. NTES outperforms 77.63% of its industry peers.
In the last couple of years the Gross Margin of NTES has grown nicely.

A Closer Look at 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 0.71. This is a very positive value and a sign of high solvency as it would only need 0.71 years to pay back of all of its debts.
Looking at the Debt to FCF ratio, with a value of 0.71, NTES belongs to the top of the industry, outperforming 93.42% of the companies in the same industry.
NTES has a Debt/Equity ratio of 0.20. This is a healthy value indicating a solid balance between debt and equity.
NTES has a Current Ratio of 2.53. This indicates that NTES is financially healthy and has no problem in meeting its short term obligations.
NTES has a better Current ratio (2.53) than 77.63% of its industry peers.
NTES has a Quick Ratio of 2.52. This indicates that NTES is financially healthy and has no problem in meeting its short term obligations.
NTES has a better Quick ratio (2.52) than 78.95% of its industry peers.

Understanding NASDAQ:NTES's 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 6 out of 10:

NTES shows a strong growth in Earnings Per Share. In the last year, the EPS has been growing by 34.03%, which is quite impressive.
The Earnings Per Share has been growing by 39.56% on average over the past years. This is a very strong growth
The Revenue has been growing by 15.12% on average over the past years. This is quite good.
Based on estimates for the next years, NTES will show a quite strong growth in Earnings Per Share. The EPS will grow by 8.36% on average per year.
NTES is expected to show quite a strong growth in Revenue. In the coming years, the Revenue will grow by 9.66% yearly.

Every day, new Decent Value stocks can be found on ChartMill in our Decent Value screener.

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

Disclaimer

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.