132.24 USD
-0.6 (-0.45%)
132.24 USD
0 (0%)
We assign a fundamental rating of 8 out of 10 to NTES. NTES was compared to 80 industry peers in the Entertainment industry. NTES scores excellent points on both the profitability and health parts. This is a solid base for a good stock. NTES may be a bit undervalued, certainly considering the very reasonable score on growth This makes NTES very considerable for value and quality investing!
1. Profitability
1.1 Basic Checks
- NTES had positive earnings in the past year.
- NTES had a positive operating cash flow in the past year.
- NTES had positive earnings in each of the past 5 years.
- In the past 5 years NTES always reported a positive cash flow from operatings.
1.2 Ratios
- With an excellent Return On Assets value of 16.92%, NTES belongs to the best of the industry, outperforming 92.50% of the companies in the same industry.
- With an excellent Return On Equity value of 23.22%, NTES belongs to the best of the industry, outperforming 90.00% of the companies in the same industry.
- NTES has a Return On Invested Capital of 17.58%. This is amongst the best in the industry. NTES outperforms 93.75% 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 8.74%.
- The 3 year average ROIC (14.54%) for NTES is below the current ROIC(17.58%), indicating increased profibility in the last year.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| ROA | 16.92% | ||
| ROE | 23.22% | ||
| ROIC | 17.58% |
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 better Profit Margin (32.45%) than 97.50% of its industry peers.
- NTES's Profit Margin has declined in the last couple of years.
- Looking at the Operating Margin, with a value of 31.60%, NTES belongs to the top of the industry, outperforming 98.75% of the companies in the same industry.
- NTES's Operating Margin has improved in the last couple of years.
- With a decent Gross Margin value of 63.47%, NTES is doing good in the industry, outperforming 70.00% of the companies in the same industry.
- In the last couple of years the Gross Margin of NTES has grown nicely.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| OM | 31.6% | ||
| PM (TTM) | 32.45% | ||
| GM | 63.47% |
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
- NTES has a Return on Invested Capital (ROIC), which is well above the Cost of Capital (WACC), which means it 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
- Compared to 1 year ago, NTES has an improved debt to assets ratio.
2.2 Solvency
- The Debt to FCF ratio of NTES is 0.16, which is an excellent value as it means it would take NTES, only 0.16 years of fcf income to pay off all of its debts.
- NTES's Debt to FCF ratio of 0.16 is amongst the best of the industry. NTES outperforms 91.25% of its industry peers.
- NTES has a Debt/Equity ratio of 0.05. This is a healthy value indicating a solid balance between debt and equity.
- Looking at the Debt to Equity ratio, with a value of 0.05, NTES is in the better half of the industry, outperforming 67.50% of the companies in the same industry.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Debt/Equity | 0.05 | ||
| Debt/FCF | 0.16 | ||
| Altman-Z | N/A |
ROIC/WACC1.94
WACC9.04%
2.3 Liquidity
- NTES has a Current Ratio of 3.42. This indicates that NTES is financially healthy and has no problem in meeting its short term obligations.
- NTES's Current ratio of 3.42 is amongst the best of the industry. NTES outperforms 87.50% of its industry peers.
- A Quick Ratio of 3.41 indicates that NTES has no problem at all paying its short term obligations.
- The Quick ratio of NTES (3.41) is better than 87.50% of its industry peers.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Current Ratio | 3.42 | ||
| Quick Ratio | 3.41 |
3. Growth
3.1 Past
- The Earnings Per Share has grown by an impressive 29.11% over the past year.
- NTES shows quite a strong growth in Earnings Per Share. Measured over the last years, the EPS has been growing by 17.51% yearly.
- Looking at the last year, NTES shows a small growth in Revenue. The Revenue has grown by 5.81% in the last year.
- The Revenue has been growing by 12.19% on average over the past years. This is quite good.
EPS 1Y (TTM)29.11%
EPS 3Y21.03%
EPS 5Y17.51%
EPS Q2Q%26.66%
Revenue 1Y (TTM)5.81%
Revenue growth 3Y6.32%
Revenue growth 5Y12.19%
Sales Q2Q%8.2%
3.2 Future
- NTES is expected to show a very negative growth in Earnings Per Share. In the coming years, the EPS will decrease by -26.15% yearly.
- NTES is expected to show quite a strong growth in Revenue. In the coming years, the Revenue will grow by 9.57% yearly.
EPS Next Y20.61%
EPS Next 2Y13.13%
EPS Next 3Y12.27%
EPS Next 5Y-26.15%
Revenue Next Year7.4%
Revenue Next 2Y7.74%
Revenue Next 3Y8.19%
Revenue Next 5Y9.57%
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.
- The Revenue growth rate is decreasing: in the next years the growth will be less than in the last years.
4. Valuation
4.1 Price/Earnings Ratio
- The Price/Earnings ratio is 14.83, which indicates a correct valuation of NTES.
- Based on the Price/Earnings ratio, NTES is valued cheaply inside the industry as 87.50% of the companies are valued more expensively.
- When comparing the Price/Earnings ratio of NTES to the average of the S&P500 Index (27.21), we can say NTES is valued slightly cheaper.
- NTES is valuated correctly with a Price/Forward Earnings ratio of 13.87.
- Based on the Price/Forward Earnings ratio, NTES is valued cheaply inside the industry as 90.00% of the companies are valued more expensively.
- NTES is valuated rather cheaply when we compare the Price/Forward Earnings ratio to 24.26, which is the current average of the S&P500 Index.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| PE | 14.83 | ||
| Fwd PE | 13.87 |
4.2 Price Multiples
- NTES's Enterprise Value to EBITDA ratio is a bit cheaper when compared to the industry. NTES is cheaper than 76.25% of the companies in the same industry.
- NTES's Price/Free Cash Flow ratio is rather cheap when compared to the industry. NTES is cheaper than 92.50% of the companies in the same industry.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| P/FCF | 12.69 | ||
| EV/EBITDA | 8.7 |
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.
- NTES's earnings are expected to grow with 12.27% in the coming years. This may justify a more expensive valuation.
PEG (NY)0.72
PEG (5Y)0.85
EPS Next 2Y13.13%
EPS Next 3Y12.27%
5. Dividend
5.1 Amount
- NTES has a Yearly Dividend Yield of 2.28%. 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 7.64. NTES pays more dividend than 91.25% of the companies in the same industry.
- NTES's Dividend Yield is a higher than the S&P500 average which is at 1.81.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Dividend Yield | 2.28% |
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
- 36.47% of the earnings are spent on dividend by NTES. This is a low number and sustainable payout ratio.
DP36.47%
EPS Next 2Y13.13%
EPS Next 3Y12.27%
NETEASE INC-ADR / NTES FAQ
What is the ChartMill fundamental rating of NETEASE INC-ADR (NTES) stock?
ChartMill assigns a fundamental rating of 8 / 10 to NTES.
Can you provide the valuation status for NETEASE INC-ADR?
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.
What are the PE and PB ratios of NETEASE INC-ADR (NTES) stock?
The Price/Earnings (PE) ratio for NETEASE INC-ADR (NTES) is 14.83 and the Price/Book (PB) ratio is 3.8.
Is the dividend of NETEASE INC-ADR sustainable?
The dividend rating of NETEASE INC-ADR (NTES) is 6 / 10 and the dividend payout ratio is 36.47%.