NASDAQ:NTES is an undervalued gem with solid fundamentals.

Last update: Jan 3, 2025

Take a closer look at NETEASE INC-ADR (NASDAQ:NTES), a remarkable value stock uncovered by our stock screener. NASDAQ:NTES excels in fundamentals and maintains a very reasonable valuation. Let's break it down further.

Evaluating Valuation: NASDAQ:NTES

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:

86.36% of the companies in the same industry are more expensive than NTES, based on the Price/Earnings ratio.
The average S&P500 Price/Earnings ratio is at 27.09. NTES is valued rather cheaply when compared to this.
With a Price/Forward Earnings ratio of 11.60, the valuation of NTES can be described as very reasonable.
Compared to the rest of the industry, the Price/Forward Earnings ratio of NTES indicates a rather cheap valuation: NTES is cheaper than 92.42% of the companies listed in the same industry.
The average S&P500 Price/Forward Earnings ratio is at 23.45. NTES is valued rather cheaply 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 81.82% of the companies listed in the same industry.
Based on the Price/Free Cash Flow ratio, NTES is valued cheaply inside the industry as 89.39% of the companies are valued more expensively.
NTES has an outstanding profitability rating, which may justify a higher PE ratio.

Looking at the Profitability

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 9 is noteworthy for profitability:

The Return On Assets of NTES (14.88%) is better than 93.94% of its industry peers.
With an excellent Return On Equity value of 20.82%, NTES belongs to the best of the industry, outperforming 89.39% of the companies in the same industry.
The Return On Invested Capital of NTES (15.81%) is better than 95.45% of its industry peers.
The last Return On Invested Capital (15.81%) for NTES is above the 3 year average (12.62%), which is a sign of increasing profitability.
The Profit Margin of NTES (26.03%) is better than 95.45% of its industry peers.
NTES's Profit Margin has improved in the last couple of years.
Looking at the Operating Margin, with a value of 27.09%, NTES belongs to the top of the industry, outperforming 96.97% 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 62.79%. This is in the better half of the industry: NTES outperforms 74.24% of its industry peers.
NTES's Gross Margin has improved in the last couple of years.

ChartMill's Evaluation of Health

ChartMill employs its own Health Rating for stock assessment. This rating, ranging from 0 to 10, is calculated by examining various liquidity and solvency ratios. In the case of NASDAQ:NTES, the assigned 7 reflects its health status:

NTES has a debt to FCF ratio of 0.31. This is a very positive value and a sign of high solvency as it would only need 0.31 years to pay back of all of its debts.
The Debt to FCF ratio of NTES (0.31) is better than 89.39% of its industry peers.
NTES has a Debt/Equity ratio of 0.08. This is a healthy value indicating a solid balance between debt and equity.
NTES has a better Debt to Equity ratio (0.08) than 72.73% of its industry peers.
A Current Ratio of 3.08 indicates that NTES has no problem at all paying its short term obligations.
NTES has a better Current ratio (3.08) than 81.82% of its industry peers.
A Quick Ratio of 3.06 indicates that NTES has no problem at all paying its short term obligations.
With an excellent Quick ratio value of 3.06, NTES belongs to the best of the industry, outperforming 81.82% of the companies in the same industry.

Growth Assessment of NASDAQ:NTES

A key component of ChartMill's stock assessment is the Growth Rating, which spans from 0 to 10. This rating evaluates diverse growth factors, such as EPS and revenue growth, considering both past performance and future projections. NASDAQ:NTES has received a 5 out of 10:

Measured over the past years, NTES shows a very strong growth in Earnings Per Share. The EPS has been growing by 39.56% on average per year.
The Revenue has been growing by 15.12% on average over the past years. This is quite good.
NTES is expected to show quite a strong growth in Revenue. In the coming years, the Revenue will grow by 8.32% 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

Important Note: The content of this article is not intended as trading advice. It is essential to perform your own analysis and exercise caution when making trading decisions. The article presents observations created by automated analysis but does not guarantee any trading or investment outcomes. Always trade responsibly and make independent judgments.