NETEASE INC-ADR (NTES) Stock Fundamental Analysis
USA - NASDAQ:NTES - US64110W1027 - ADR
154.83 USD
+2.03 (+1.33%)
154.83 USD
0 (0%)
We assign a fundamental rating of 7 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 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.
NTES had a positive operating cash flow in each of the past 5 years.
1.2 Ratios
With an excellent Return On Assets value of 16.41%, NTES belongs to the best of the industry, outperforming 93.75% of the companies in the same industry.
NTES's Return On Equity of 22.87% is amongst the best of the industry. NTES outperforms 91.25% of its industry peers.
NTES has a Return On Invested Capital of 17.40%. This is amongst the best in the industry. NTES outperforms 95.00% of its industry peers.
The Average Return On Invested Capital over the past 3 years for NTES is significantly above the industry average of 9.25%.
The 3 year average ROIC (14.54%) for NTES is below the current ROIC(17.40%), indicating increased profibility in the last year.
| 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 better Profit Margin (31.19%) than 97.50% of its industry peers.
In the last couple of years the Profit Margin of NTES has declined.
Looking at the Operating Margin, with a value of 31.43%, NTES belongs to the top of the industry, outperforming 98.75% of the companies in the same industry.
In the last couple of years the Operating Margin of NTES has grown nicely.
NTES has a better Gross Margin (63.17%) than 71.25% 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.
NTES has less shares outstanding than it did 1 year ago.
The number of shares outstanding for NTES has been reduced compared to 5 years ago.
NTES has a better debt/assets ratio than last year.
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 has a Debt to FCF ratio of 0.25. This is amongst the best in the industry. NTES outperforms 88.75% 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.
Looking at the Debt to Equity ratio, with a value of 0.08, NTES is in the better half of the industry, outperforming 62.50% of the companies in the same industry.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Debt/Equity | 0.08 | ||
| Debt/FCF | 0.25 | ||
| Altman-Z | N/A |
ROIC/WACC2.54
WACC6.86%
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 90.00% 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.
The Quick ratio of NTES (3.22) is better than 90.00% 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.
Measured over the past years, NTES shows a quite strong growth in Earnings Per Share. The EPS has been growing by 17.51% on average per year.
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.
Based on estimates for the next years, NTES will show a quite strong growth in Revenue. The Revenue will grow by 9.49% on average per year.
EPS Next Y21.23%
EPS Next 2Y13.42%
EPS Next 3Y12.44%
EPS Next 5Y-26.15%
Revenue Next Year8.55%
Revenue Next 2Y8.05%
Revenue Next 3Y8.17%
Revenue Next 5Y9.49%
3.3 Evolution
The EPS growth rate is decreasing: in the next years the growth will be less than in the last years.
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
With a Price/Earnings ratio of 18.68, NTES is valued on the expensive side.
Based on the Price/Earnings ratio, NTES is valued cheaper than 86.25% of the companies in the same industry.
Compared to an average S&P500 Price/Earnings ratio of 27.27, NTES is valued a bit cheaper.
The Price/Forward Earnings ratio is 16.53, which indicates a correct valuation of NTES.
Based on the Price/Forward Earnings ratio, NTES is valued cheaply inside the industry as 87.50% of the companies are valued more expensively.
NTES's Price/Forward Earnings ratio indicates a valuation a bit cheaper than the S&P500 average which is at 22.77.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| PE | 18.68 | ||
| Fwd PE | 16.53 |
4.2 Price Multiples
Based on the Enterprise Value to EBITDA ratio, NTES is valued a bit cheaper than the industry average as 76.25% of the companies are valued more expensively.
Based on the Price/Free Cash Flow ratio, NTES is valued cheaper than 90.00% of the companies in the same industry.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| P/FCF | 16.06 | ||
| EV/EBITDA | 12.64 |
4.3 Compensation for Growth
The 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 12.44% in the coming years.
PEG (NY)0.88
PEG (5Y)1.07
EPS Next 2Y13.42%
EPS Next 3Y12.44%
5. Dividend
5.1 Amount
With a Yearly Dividend Yield of 1.93%, NTES has a reasonable but not impressive dividend return.
Compared to an average industry Dividend Yield of 12.26, NTES pays a better dividend. On top of this NTES pays more dividend than 90.00% of the companies listed in the same industry.
NTES's Dividend Yield is comparable with the S&P500 average which is at 2.38.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Dividend Yield | 1.93% |
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
36.90% of the earnings are spent on dividend by NTES. This is a low number and sustainable payout ratio.
DP36.9%
EPS Next 2Y13.42%
EPS Next 3Y12.44%
154.83
+2.03 (+1.33%)
Chartmill FA Rating
GICS SectorCommunication Services
GICS IndustryGroupMedia & Entertainment
GICS IndustryEntertainment
Earnings (Last)
Earnings (Next)
Inst Owners12.06%
Inst Owner Change-23.06%
Ins OwnersN/A
Ins Owner ChangeN/A
Market Cap99.79B
Analysts82.22
Price Target157.54 (1.75%)
Short Float %2.11%
Short Ratio3.51
Dividend
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Dividend Yield | 1.93% |
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)6.37%
PT rev (3m)14.37%
EPS NQ rev (1m)-0.22%
EPS NQ rev (3m)-0.15%
EPS NY rev (1m)0.51%
EPS NY rev (3m)11.3%
Revenue NQ rev (1m)1.1%
Revenue NQ rev (3m)0.69%
Revenue NY rev (1m)0.28%
Revenue NY rev (3m)0.14%
Valuation
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| PE | 18.68 | ||
| Fwd PE | 16.53 | ||
| P/S | 6.48 | ||
| P/FCF | 16.06 | ||
| P/OCF | 15.27 | ||
| P/B | 4.75 | ||
| P/tB | 4.75 | ||
| EV/EBITDA | 12.64 |
EPS(TTM)8.29
EY5.35%
EPS(NY)9.37
Fwd EY6.05%
FCF(TTM)9.64
FCFY6.23%
OCF(TTM)10.14
OCFY6.55%
SpS23.89
BVpS32.59
TBVpS32.59
PEG (NY)0.88
PEG (5Y)1.07
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%
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 | 0.08 | ||
| 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
WACC6.86%
ROIC/WACC2.54
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 Y21.23%
EPS Next 2Y13.42%
EPS Next 3Y12.44%
EPS Next 5Y-26.15%
Revenue 1Y (TTM)2.74%
Revenue growth 3Y6.32%
Revenue growth 5Y12.19%
Sales Q2Q%9.44%
Revenue Next Year8.55%
Revenue Next 2Y8.05%
Revenue Next 3Y8.17%
Revenue Next 5Y9.49%
EBIT growth 1Y18.69%
EBIT growth 3Y21.69%
EBIT growth 5Y16.49%
EBIT Next Year36.95%
EBIT Next 3Y17.61%
EBIT Next 5Y16.14%
FCF growth 1Y65.97%
FCF growth 3Y19.76%
FCF growth 5Y21.96%
OCF growth 1Y54.29%
OCF growth 3Y16.76%
OCF growth 5Y18.17%