NETEASE INC-ADR (NTES) Stock Fundamental Analysis
USA - NASDAQ:NTES - US64110W1027 - ADR
138.985 USD
-0.28 (-0.2%)
141.5 USD
+2.51 (+1.81%)
We assign a fundamental rating of 7 out of 10 to NTES. NTES was compared to 79 industry peers in the Entertainment industry. Both the health and profitability get an excellent rating, making NTES a very profitable company, without any liquidiy or solvency issues. NTES scores decently on growth, while it is valued quite cheap. This could make an interesting combination. This makes NTES very considerable for value and quality investing!
1. Profitability
1.1 Basic Checks
In the past year NTES was profitable.
NTES had a positive operating cash flow in the past year.
Each year in the past 5 years NTES has been profitable.
In the past 5 years NTES always reported a positive cash flow from operatings.
1.2 Ratios
NTES has a better Return On Assets (16.41%) than 92.41% of its industry peers.
NTES has a better Return On Equity (22.87%) than 87.34% of its industry peers.
The Return On Invested Capital of NTES (17.40%) is better than 94.94% of its industry peers.
Measured over the past 3 years, the Average Return On Invested Capital for NTES is significantly above the industry average of 9.19%.
The last Return On Invested Capital (17.40%) for NTES is above the 3 year average (14.54%), which is a sign of increasing profitability.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| ROA | 16.41% | ||
| ROE | 22.87% | ||
| ROIC | 17.4% |
ROA(3y)14.25%
ROA(5y)12.44%
ROE(3y)21.5%
ROE(5y)19.37%
ROIC(3y)14.54%
ROIC(5y)13.18%
1.3 Margins
NTES has a Profit Margin of 31.19%. This is amongst the best in the industry. NTES outperforms 97.47% of its industry peers.
In the last couple of years the Profit Margin of NTES has declined.
NTES has a better Operating Margin (31.43%) than 98.73% of its industry peers.
NTES's Operating Margin has improved in the last couple of years.
The Gross Margin of NTES (63.17%) is better than 70.89% of its industry peers.
In the last couple of years the Gross Margin of NTES has grown nicely.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| OM | 31.43% | ||
| PM (TTM) | 31.19% | ||
| GM | 63.17% |
OM growth 3Y14.45%
OM growth 5Y3.83%
PM growth 3Y13.59%
PM growth 5Y-4.68%
GM growth 3Y5.24%
GM growth 5Y3.25%
2. Health
2.1 Basic Checks
The Return on Invested Capital (ROIC) is well above the Cost of Capital (WACC), so NTES is creating value.
The number of shares outstanding for NTES has been reduced compared to 1 year ago.
Compared to 5 years ago, NTES has less shares outstanding
The debt/assets ratio for NTES has been reduced compared to a year ago.
2.2 Solvency
NTES has a debt to FCF ratio of 0.25. This is a very positive value and a sign of high solvency as it would only need 0.25 years to pay back of all of its debts.
NTES's Debt to FCF ratio of 0.25 is amongst the best of the industry. NTES outperforms 87.34% 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 62.03% of its industry peers.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Debt/Equity | 0.08 | ||
| Debt/FCF | 0.25 | ||
| Altman-Z | N/A |
ROIC/WACC2.56
WACC6.8%
2.3 Liquidity
NTES has a Current Ratio of 3.23. This indicates that NTES is financially healthy and has no problem in meeting its short term obligations.
With an excellent Current ratio value of 3.23, NTES belongs to the best of the industry, outperforming 89.87% of the companies in the same industry.
A Quick Ratio of 3.22 indicates that NTES has no problem at all paying its short term obligations.
NTES has a Quick ratio of 3.22. This is amongst the best in the industry. NTES outperforms 89.87% of its industry peers.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Current Ratio | 3.23 | ||
| Quick Ratio | 3.22 |
3. Growth
3.1 Past
The Earnings Per Share has grown by an nice 18.55% over the past year.
The Earnings Per Share has been growing by 17.51% on average over the past years. This is quite good.
Looking at the last year, NTES shows a small growth in Revenue. The Revenue has grown by 2.74% in the last year.
Measured over the past years, NTES shows a quite strong growth in Revenue. The Revenue has been growing by 12.19% on average per year.
EPS 1Y (TTM)18.55%
EPS 3Y21.03%
EPS 5Y17.51%
EPS Q2Q%22.9%
Revenue 1Y (TTM)2.74%
Revenue growth 3Y6.32%
Revenue growth 5Y12.19%
Sales Q2Q%9.44%
3.2 Future
Based on estimates for the next years, NTES will show a very negative growth in Earnings Per Share. The EPS will decrease by -26.15% on average per year.
NTES is expected to show quite a strong growth in Revenue. In the coming years, the Revenue will grow by 9.60% yearly.
EPS Next Y21.54%
EPS Next 2Y13.75%
EPS Next 3Y12.78%
EPS Next 5Y-26.15%
Revenue Next Year8.54%
Revenue Next 2Y8.15%
Revenue Next 3Y8.44%
Revenue Next 5Y9.6%
3.3 Evolution
When comparing the EPS growth rate of the last years to the growth rate of the upcoming years, we see that the growth is decreasing.
When comparing the Revenue growth rate of the last years to the growth rate of the upcoming years, we see that the growth is decreasing.
4. Valuation
4.1 Price/Earnings Ratio
A Price/Earnings ratio of 16.77 indicates a correct valuation of NTES.
84.81% 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 valuation a bit cheaper than the S&P500 average which is at 25.83.
With a Price/Forward Earnings ratio of 14.74, NTES is valued correctly.
Based on the Price/Forward Earnings ratio, NTES is valued cheaply inside the industry as 89.87% of the companies are valued more expensively.
NTES's Price/Forward Earnings ratio indicates a rather cheap valuation when compared to the S&P500 average which is at 32.68.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| PE | 16.77 | ||
| Fwd PE | 14.74 |
4.2 Price Multiples
Based on the Enterprise Value to EBITDA ratio, NTES is valued a bit cheaper than the industry average as 77.22% of the companies are valued more expensively.
Based on the Price/Free Cash Flow ratio, NTES is valued cheaper than 88.61% of the companies in the same industry.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| P/FCF | 14.41 | ||
| EV/EBITDA | 10.93 |
4.3 Compensation for Growth
NTES's low PEG Ratio(NY), which compensates the Price/Earnings for growth, indicates a rather cheap valuation of the company.
NTES has an outstanding profitability rating, which may justify a higher PE ratio.
A more expensive valuation may be justified as NTES's earnings are expected to grow with 12.78% in the coming years.
PEG (NY)0.78
PEG (5Y)0.96
EPS Next 2Y13.75%
EPS Next 3Y12.78%
5. Dividend
5.1 Amount
NTES has a Yearly Dividend Yield of 2.08%. Purely for dividend investing, there may be better candidates out there.
NTES's Dividend Yield is rather good when compared to the industry average which is at 38.17. NTES pays more dividend than 91.14% of the companies in the same industry.
NTES's Dividend Yield is comparable with the S&P500 average which is at 2.37.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Dividend Yield | 2.08% |
5.2 History
The dividend of NTES has a limited annual growth rate of 4.94%.
NTES has been paying a dividend for at least 10 years, so it has a reliable track record.
NTES has not decreased its dividend in the last 3 years.
Dividend Growth(5Y)4.94%
Div Incr Years3
Div Non Decr Years3
5.3 Sustainability
NTES pays out 36.90% of its income as dividend. This is a sustainable payout ratio.
DP36.9%
EPS Next 2Y13.75%
EPS Next 3Y12.78%
138.985
-0.28 (-0.2%)
Chartmill FA Rating
GICS SectorCommunication Services
GICS IndustryGroupMedia & Entertainment
GICS IndustryEntertainment
Earnings (Last)
Earnings (Next)
Inst Owners9.59%
Inst Owner Change-0.66%
Ins OwnersN/A
Ins Owner ChangeN/A
Market Cap89.57B
Revenue(TTM)109.68B
Net Income(TTM)34.21B
Analysts83.89
Price Target164.19 (18.14%)
Short Float %1.58%
Short Ratio2.97
Dividend
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Dividend Yield | 2.08% |
Yearly Dividend2.45
Dividend Growth(5Y)4.94%
DP36.9%
Div Incr Years3
Div Non Decr Years3
Ex-Date
Surprises & Revisions
EPS beat(2)1
Avg EPS beat(2)10.07%
Min EPS beat(2)-2.68%
Max EPS beat(2)22.83%
EPS beat(4)2
Avg EPS beat(4)6.87%
Min EPS beat(4)-8.86%
Max EPS beat(4)22.83%
EPS beat(8)4
Avg EPS beat(8)4.89%
EPS beat(12)7
Avg EPS beat(12)13.23%
EPS beat(16)10
Avg EPS beat(16)14.05%
Revenue beat(2)0
Avg Revenue beat(2)-2.35%
Min Revenue beat(2)-3.91%
Max Revenue beat(2)-0.78%
Revenue beat(4)0
Avg Revenue beat(4)-3.07%
Min Revenue beat(4)-4.07%
Max Revenue beat(4)-0.78%
Revenue beat(8)0
Avg Revenue beat(8)-3.46%
Revenue beat(12)0
Avg Revenue beat(12)-3.33%
Revenue beat(16)2
Avg Revenue beat(16)-2.21%
PT rev (1m)4.22%
PT rev (3m)13.05%
EPS NQ rev (1m)-0.25%
EPS NQ rev (3m)-0.14%
EPS NY rev (1m)-0.04%
EPS NY rev (3m)0.76%
Revenue NQ rev (1m)0.08%
Revenue NQ rev (3m)1.07%
Revenue NY rev (1m)-0.01%
Revenue NY rev (3m)0.27%
Valuation
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| PE | 16.77 | ||
| Fwd PE | 14.74 | ||
| P/S | 5.81 | ||
| P/FCF | 14.41 | ||
| P/OCF | 13.7 | ||
| P/B | 4.26 | ||
| P/tB | 4.26 | ||
| EV/EBITDA | 10.93 |
EPS(TTM)8.29
EY5.96%
EPS(NY)9.43
Fwd EY6.78%
FCF(TTM)9.65
FCFY6.94%
OCF(TTM)10.15
OCFY7.3%
SpS23.9
BVpS32.6
TBVpS32.6
PEG (NY)0.78
PEG (5Y)0.96
Graham Number77.98
Profitability
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| ROA | 16.41% | ||
| ROE | 22.87% | ||
| ROCE | 21.81% | ||
| ROIC | 17.4% | ||
| ROICexc | 130.14% | ||
| ROICexgc | 130.14% | ||
| OM | 31.43% | ||
| PM (TTM) | 31.19% | ||
| GM | 63.17% | ||
| FCFM | 40.36% |
ROA(3y)14.25%
ROA(5y)12.44%
ROE(3y)21.5%
ROE(5y)19.37%
ROIC(3y)14.54%
ROIC(5y)13.18%
ROICexc(3y)98.11%
ROICexc(5y)81.85%
ROICexgc(3y)117.55%
ROICexgc(5y)98.29%
ROCE(3y)19.38%
ROCE(5y)17.87%
ROICexgc growth 3Y31.39%
ROICexgc growth 5Y13.28%
ROICexc growth 3Y29.84%
ROICexc growth 5Y14.27%
OM growth 3Y14.45%
OM growth 5Y3.83%
PM growth 3Y13.59%
PM growth 5Y-4.68%
GM growth 3Y5.24%
GM growth 5Y3.25%
F-Score8
Asset Turnover0.53
Health
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Debt/Equity | 0.08 | ||
| Debt/FCF | 0.25 | ||
| Debt/EBITDA | 0.31 | ||
| Cap/Depr | 107.66% | ||
| Cap/Sales | 2.09% | ||
| Interest Coverage | 97.92 | ||
| Cash Conversion | 127.21% | ||
| Profit Quality | 129.41% | ||
| Current Ratio | 3.23 | ||
| Quick Ratio | 3.22 | ||
| Altman-Z | N/A |
F-Score8
WACC6.8%
ROIC/WACC2.56
Cap/Depr(3y)107.89%
Cap/Depr(5y)102.75%
Cap/Sales(3y)2.99%
Cap/Sales(5y)3.4%
Profit Quality(3y)118.33%
Profit Quality(5y)132.69%
High Growth Momentum
Growth
EPS 1Y (TTM)18.55%
EPS 3Y21.03%
EPS 5Y17.51%
EPS Q2Q%22.9%
EPS Next Y21.54%
EPS Next 2Y13.75%
EPS Next 3Y12.78%
EPS Next 5Y-26.15%
Revenue 1Y (TTM)2.74%
Revenue growth 3Y6.32%
Revenue growth 5Y12.19%
Sales Q2Q%9.44%
Revenue Next Year8.54%
Revenue Next 2Y8.15%
Revenue Next 3Y8.44%
Revenue Next 5Y9.6%
EBIT growth 1Y18.69%
EBIT growth 3Y21.69%
EBIT growth 5Y16.49%
EBIT Next Year38.3%
EBIT Next 3Y18.56%
EBIT Next 5Y16.26%
FCF growth 1Y65.97%
FCF growth 3Y19.76%
FCF growth 5Y21.96%
OCF growth 1Y54.29%
OCF growth 3Y16.76%
OCF growth 5Y18.17%
NETEASE INC-ADR / NTES FAQ
What is the ChartMill fundamental rating of NETEASE INC-ADR (NTES) stock?
ChartMill assigns a fundamental rating of 7 / 10 to NTES.
What is the valuation status for NTES stock?
ChartMill assigns a valuation rating of 8 / 10 to NETEASE INC-ADR (NTES). This can be considered as Undervalued.
What is the profitability of NTES stock?
NETEASE INC-ADR (NTES) has a profitability rating of 9 / 10.
How financially healthy is NETEASE INC-ADR?
The financial health rating of NETEASE INC-ADR (NTES) is 8 / 10.
Can you provide the expected EPS growth for NTES stock?
The Earnings per Share (EPS) of NETEASE INC-ADR (NTES) is expected to grow by 21.54% in the next year.