NASDAQ:NTES appears to be flying under the radar despite its strong fundamentals.

Last update: Nov 6, 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.

Evaluating Valuation: NASDAQ:NTES

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:

With a Price/Earnings ratio of 11.44, the valuation of NTES can be described as very reasonable.
87.32% 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 27.91, NTES is valued rather cheaply.
The Price/Forward Earnings ratio is 10.29, which indicates a very decent valuation of NTES.
Based on the Price/Forward Earnings ratio, NTES is valued cheaply inside the industry as 91.55% of the companies are valued more expensively.
Compared to an average S&P500 Price/Forward Earnings ratio of 23.57, NTES is valued rather cheaply.
NTES's Enterprise Value to EBITDA ratio is rather cheap when compared to the industry. NTES is cheaper than 83.10% of the companies in the same industry.
Compared to the rest of the industry, the Price/Free Cash Flow ratio of NTES indicates a rather cheap valuation: NTES is cheaper than 90.14% of the companies listed in the same industry.
The excellent profitability rating of NTES may justify a higher PE ratio.

Analyzing Profitability Metrics

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's Return On Assets of 15.71% is amongst the best of the industry. NTES outperforms 94.37% of its industry peers.
NTES has a Return On Equity of 22.01%. This is amongst the best in the industry. NTES outperforms 90.14% of its industry peers.
Looking at the Return On Invested Capital, with a value of 15.95%, NTES belongs to the top of the industry, outperforming 94.37% of the companies in the same industry.
The last Return On Invested Capital (15.95%) for NTES is above the 3 year average (12.62%), which is a sign of increasing profitability.
NTES has a Profit Margin of 26.99%. This is amongst the best in the industry. NTES outperforms 97.18% of its industry peers.
In the last couple of years the Profit Margin of NTES has grown nicely.
NTES has a better Operating Margin (27.21%) than 97.18% of its industry peers.
In the last couple of years the Operating Margin of NTES has grown nicely.
NTES's Gross Margin of 62.62% is fine compared to the rest of the industry. NTES outperforms 71.83% of its industry peers.
NTES's Gross Margin has improved in the last couple of years.

Health Insights: 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:

The Debt to FCF ratio of NTES is 0.39, which is an excellent value as it means it would take NTES, only 0.39 years of fcf income to pay off all of its debts.
The Debt to FCF ratio of NTES (0.39) is better than 91.55% of its industry peers.
A Debt/Equity ratio of 0.10 indicates that NTES is not too dependend on debt financing.
NTES has a better Debt to Equity ratio (0.10) than 70.42% of its industry peers.
NTES has a Current Ratio of 3.01. 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 3.01, NTES belongs to the top of the industry, outperforming 81.69% of the companies in the same industry.
A Quick Ratio of 3.00 indicates that NTES has no problem at all paying its short term obligations.
NTES's Quick ratio of 3.00 is amongst the best of the industry. NTES outperforms 81.69% of its industry peers.

ChartMill's Evaluation of Growth

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:

The Earnings Per Share has grown by an nice 12.67% over the past year.
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 grown by 8.00% in the past year. This is quite good.
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 Revenue. The Revenue will grow by 9.53% 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.