NASDAQ:NTES is an undervalued gem with solid fundamentals.

Last update: Jul 18, 2024

NETEASE INC-ADR (NASDAQ:NTES) is a hidden gem identified by our stock screening tool, featuring undervaluation and robust fundamentals. NASDAQ:NTES showcases decent financial health and profitability, coupled with an attractive price. Let's dig deeper into the analysis.

A Closer Look at Valuation for NASDAQ:NTES

An integral part of ChartMill's stock analysis is the Valuation Rating, which spans from 0 to 10. This rating evaluates diverse valuation factors, including price to earnings and cash flows, while considering the stock's profitability and growth. NASDAQ:NTES has received a 7 out of 10:

86.30% of the companies in the same industry are more expensive than NTES, based on the Price/Earnings ratio.
NTES's Price/Earnings ratio indicates a rather cheap valuation when compared to the S&P500 average which is at 29.15.
NTES is valuated reasonably with a Price/Forward Earnings ratio of 11.56.
Based on the Price/Forward Earnings ratio, NTES is valued cheaper than 89.04% of the companies in the same industry.
Compared to an average S&P500 Price/Forward Earnings ratio of 20.79, NTES is valued a bit cheaper.
Based on the Enterprise Value to EBITDA ratio, NTES is valued a bit cheaper than 79.45% of the companies in the same industry.
87.67% of the companies in the same industry are more expensive than NTES, based on the Price/Free Cash Flow ratio.
NTES has an outstanding profitability rating, which may justify a higher PE ratio.

Understanding NASDAQ:NTES's Profitability

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 9:

The Return On Assets of NTES (15.53%) is better than 97.26% of its industry peers.
NTES has a better Return On Equity (23.80%) than 91.78% of its industry peers.
Looking at the Return On Invested Capital, with a value of 14.55%, NTES belongs to the top of the industry, outperforming 93.15% 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.
NTES has a Profit Margin of 28.78%. This is amongst the best in the industry. NTES outperforms 97.26% of its industry peers.
In the last couple of years the Profit Margin of NTES has grown nicely.
Looking at the Operating Margin, with a value of 26.70%, NTES belongs to the top of the industry, outperforming 97.26% of the companies in the same industry.
NTES's Operating Margin has improved in the last couple of years.
NTES has a Gross Margin of 61.92%. This is in the better half of the industry: NTES outperforms 78.08% of its industry peers.
In the last couple of years the Gross Margin of NTES has grown nicely.

Health Insights: NASDAQ:NTES

ChartMill employs a unique Health Rating system for all stocks. This rating, ranging from 0 to 10, is determined by analyzing various liquidity and solvency ratios. For NASDAQ:NTES, the assigned 7 for health provides valuable insights:

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.
NTES has a better Debt to FCF ratio (0.71) than 93.15% of its industry peers.
A Debt/Equity ratio of 0.20 indicates that NTES is not too dependend on debt financing.
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 Current ratio of 2.53. This is in the better half of the industry: NTES outperforms 76.71% of its industry peers.
A Quick Ratio of 2.52 indicates that NTES has no problem at all paying its short term obligations.
NTES has a Quick ratio of 2.52. This is in the better half of the industry: NTES outperforms 78.08% of its industry peers.

Evaluating Growth: NASDAQ:NTES

ChartMill assigns a proprietary Growth Rating to each stock. The score is computed by evaluating various growth aspects, like EPS and revenue growth. We take into account the history as well as the estimated future numbers. NASDAQ:NTES was assigned a score of 6 for growth:

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.
NTES shows a strong growth in Earnings Per Share. Measured over the last years, the EPS has been growing by 39.56% yearly.
Measured over the past years, NTES shows a quite strong growth in Revenue. The Revenue has been growing by 15.12% 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 9.53% 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.

Disclaimer

This article should in no way be interpreted as advice. 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.