NETEASE INC-ADR (NTES) Stock Fundamental Analysis
NASDAQ:NTES - Nasdaq - US64110W1027 - ADR - Currency: USD
NTES gets a fundamental rating of 7 out of 10. The analysis compared the fundamentals against 72 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 is valued quite cheap, while showing a decent growth score. This is a good combination! 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 16.11%, NTES belongs to the best of the industry, outperforming 95.83% of the companies in the same industry.
NTES's Return On Equity of 22.50% is amongst the best of the industry. NTES outperforms 90.28% of its industry peers.
NTES has a Return On Invested Capital of 17.14%. This is amongst the best in the industry. NTES outperforms 93.06% of its industry peers.
Measured over the past 3 years, the Average Return On Invested Capital for NTES is significantly below the industry average of 22.90%.
The 3 year average ROIC (14.54%) for NTES is below the current ROIC(17.14%), indicating increased profibility in the last year.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| ROA | 16.11% | ||
| ROE | 22.5% | ||
| ROIC | 17.14% |
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
With an excellent Profit Margin value of 30.17%, NTES belongs to the best of the industry, outperforming 97.22% of the companies in the same industry.
NTES's Profit Margin has declined in the last couple of years.
Looking at the Operating Margin, with a value of 30.21%, NTES belongs to the top of the industry, outperforming 98.61% of the companies in the same industry.
In the last couple of years the Operating Margin of NTES has grown nicely.
Looking at the Gross Margin, with a value of 62.71%, NTES is in the better half of the industry, outperforming 70.83% 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 | 30.21% | ||
| PM (TTM) | 30.17% | ||
| GM | 62.71% |
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.
NTES has less shares outstanding than it did 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
The Debt to FCF ratio of NTES is 0.25, which is an excellent value as it means it would take NTES, only 0.25 years of fcf income to pay off all of its debts.
Looking at the Debt to FCF ratio, with a value of 0.25, NTES belongs to the top of the industry, outperforming 90.28% of the companies in the same industry.
A Debt/Equity ratio of 0.07 indicates that NTES is not too dependend on debt financing.
The Debt to Equity ratio of NTES (0.07) is better than 65.28% of its industry peers.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Debt/Equity | 0.07 | ||
| Debt/FCF | 0.25 | ||
| Altman-Z | N/A |
ROIC/WACC2.53
WACC6.77%
2.3 Liquidity
NTES has a Current Ratio of 3.21. 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 3.21, NTES belongs to the top of the industry, outperforming 87.50% of the companies in the same industry.
NTES has a Quick Ratio of 3.20. This indicates that NTES is financially healthy and has no problem in meeting its short term obligations.
Looking at the Quick ratio, with a value of 3.20, NTES belongs to the top of the industry, outperforming 87.50% of the companies in the same industry.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Current Ratio | 3.21 | ||
| Quick Ratio | 3.2 |
3. Growth
3.1 Past
NTES shows a strong growth in Earnings Per Share. In the last year, the EPS has been growing by 9.01%, which is quite good.
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 1.90% 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)9.01%
EPS 3Y21.03%
EPS 5Y17.51%
EPS Q2Q%33.66%
Revenue 1Y (TTM)1.9%
Revenue growth 3Y6.32%
Revenue growth 5Y12.19%
Sales Q2Q%7.36%
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 -26.11% on average per year.
NTES is expected to show quite a strong growth in Revenue. In the coming years, the Revenue will grow by 9.53% yearly.
EPS Next Y19.96%
EPS Next 2Y12.04%
EPS Next 3Y11.36%
EPS Next 5Y-26.11%
Revenue Next Year8.09%
Revenue Next 2Y7.5%
Revenue Next 3Y7.82%
Revenue Next 5Y9.53%
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 17.14, which indicates a rather expensive current valuation of NTES.
Based on the Price/Earnings ratio, NTES is valued cheaper than 86.11% of the companies in the same industry.
The average S&P500 Price/Earnings ratio is at 27.15. NTES is valued slightly cheaper when compared to this.
A Price/Forward Earnings ratio of 14.82 indicates a correct valuation of NTES.
NTES's Price/Forward Earnings ratio is rather cheap when compared to the industry. NTES is cheaper than 87.50% of the companies in the same industry.
The average S&P500 Price/Forward Earnings ratio is at 21.60. NTES is valued slightly cheaper when compared to this.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| PE | 17.14 | ||
| Fwd PE | 14.82 |
4.2 Price Multiples
Based on the Enterprise Value to EBITDA ratio, NTES is valued a bit cheaper than the industry average as 77.78% of the companies are valued more expensively.
Based on the Price/Free Cash Flow ratio, NTES is valued cheaper than 84.72% of the companies in the same industry.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| P/FCF | 15.6 | ||
| EV/EBITDA | 10.79 |
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.
The excellent profitability rating of NTES may justify a higher PE ratio.
PEG (NY)0.86
PEG (5Y)0.98
EPS Next 2Y12.04%
EPS Next 3Y11.36%
5. Dividend
5.1 Amount
With a Yearly Dividend Yield of 2.07%, NTES has a reasonable but not impressive dividend return.
Compared to an average industry Dividend Yield of 6.65, NTES pays a better dividend. On top of this NTES pays more dividend than 90.28% of the companies listed in the same industry.
Compared to an average S&P500 Dividend Yield of 2.42, NTES has a dividend comparable with the average S&P500 company.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Dividend Yield | 2.07% |
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 36.47% of its income as dividend. This is a sustainable payout ratio.
DP36.47%
EPS Next 2Y12.04%
EPS Next 3Y11.36%
134.58
+1.93 (+1.45%)
Chartmill FA Rating
GICS SectorCommunication Services
GICS IndustryGroupMedia & Entertainment
GICS IndustryEntertainment
Earnings (Last)
Earnings (Next)
Inst Owners12.52%
Inst Owner Change0.7%
Ins OwnersN/A
Ins Owner ChangeN/A
Market Cap86.74B
Analysts83.89
Price Target145.17 (7.87%)
Short Float %2.05%
Short Ratio1.73
Dividend
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Dividend Yield | 2.07% |
Yearly Dividend2.43
Dividend Growth(5Y)4.94%
DP36.47%
Div Incr Years3
Div Non Decr Years3
Ex-Date
Surprises & Revisions
EPS beat(2)2
Avg EPS beat(2)19.52%
Min EPS beat(2)16.21%
Max EPS beat(2)22.83%
EPS beat(4)2
Avg EPS beat(4)6.94%
Min EPS beat(4)-8.86%
Max EPS beat(4)22.83%
EPS beat(8)5
Avg EPS beat(8)11.49%
EPS beat(12)8
Avg EPS beat(12)15.1%
EPS beat(16)11
Avg EPS beat(16)14.48%
Revenue beat(2)0
Avg Revenue beat(2)-2.15%
Min Revenue beat(2)-3.51%
Max Revenue beat(2)-0.78%
Revenue beat(4)0
Avg Revenue beat(4)-3.01%
Min Revenue beat(4)-4.07%
Max Revenue beat(4)-0.78%
Revenue beat(8)0
Avg Revenue beat(8)-3.68%
Revenue beat(12)0
Avg Revenue beat(12)-3.01%
Revenue beat(16)2
Avg Revenue beat(16)-2.09%
PT rev (1m)18.12%
PT rev (3m)18.3%
EPS NQ rev (1m)-1.44%
EPS NQ rev (3m)11.82%
EPS NY rev (1m)10.12%
EPS NY rev (3m)9.81%
Revenue NQ rev (1m)-0.41%
Revenue NQ rev (3m)0.34%
Revenue NY rev (1m)0.69%
Revenue NY rev (3m)4.03%
Valuation
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| PE | 17.14 | ||
| Fwd PE | 14.82 | ||
| P/S | 5.8 | ||
| P/FCF | 15.6 | ||
| P/OCF | 14.73 | ||
| P/B | 4.32 | ||
| P/tB | 4.32 | ||
| EV/EBITDA | 10.79 |
EPS(TTM)7.85
EY5.83%
EPS(NY)9.08
Fwd EY6.75%
FCF(TTM)8.63
FCFY6.41%
OCF(TTM)9.14
OCFY6.79%
SpS23.21
BVpS31.12
TBVpS31.12
PEG (NY)0.86
PEG (5Y)0.98
Profitability
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| ROA | 16.11% | ||
| ROE | 22.5% | ||
| ROCE | 21.36% | ||
| ROIC | 17.14% | ||
| ROICexc | 129.21% | ||
| ROICexgc | 129.21% | ||
| OM | 30.21% | ||
| PM (TTM) | 30.17% | ||
| GM | 62.71% | ||
| FCFM | 37.17% |
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%
ROICexcg growth 3Y31.39%
ROICexcg 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 | 0.07 | ||
| Debt/FCF | 0.25 | ||
| Debt/EBITDA | 0.28 | ||
| Cap/Depr | 101.06% | ||
| Cap/Sales | 2.2% | ||
| Interest Coverage | 73.54 | ||
| Cash Conversion | 121.57% | ||
| Profit Quality | 123.19% | ||
| Current Ratio | 3.21 | ||
| Quick Ratio | 3.2 | ||
| Altman-Z | N/A |
F-Score8
WACC6.77%
ROIC/WACC2.53
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)9.01%
EPS 3Y21.03%
EPS 5Y17.51%
EPS Q2Q%33.66%
EPS Next Y19.96%
EPS Next 2Y12.04%
EPS Next 3Y11.36%
EPS Next 5Y-26.11%
Revenue 1Y (TTM)1.9%
Revenue growth 3Y6.32%
Revenue growth 5Y12.19%
Sales Q2Q%7.36%
Revenue Next Year8.09%
Revenue Next 2Y7.5%
Revenue Next 3Y7.82%
Revenue Next 5Y9.53%
EBIT growth 1Y15.26%
EBIT growth 3Y21.69%
EBIT growth 5Y16.49%
EBIT Next Year36.07%
EBIT Next 3Y15.89%
EBIT Next 5Y15.09%
FCF growth 1Y53.96%
FCF growth 3Y19.76%
FCF growth 5Y21.96%
OCF growth 1Y44.97%
OCF growth 3Y16.76%
OCF growth 5Y18.17%