NETEASE INC-ADR (NTES) Stock Fundamental Analysis
USA - NASDAQ:NTES - US64110W1027 - ADR
148.21 USD
-0.39 (-0.26%)
148.43 USD
+0.22 (+0.15%)
Taking everything into account, NTES scores 7 out of 10 in our fundamental rating. NTES was compared to 79 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. A decent growth rate in combination with a cheap valuation! Better keep an eye on NTES. These ratings could make NTES a good candidate for value and quality investing.
1. Profitability
1.1 Basic Checks
NTES had positive earnings in the past year.
In the past year NTES had a positive cash flow from operations.
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
NTES has a Return On Assets of 16.41%. This is amongst the best in the industry. NTES outperforms 92.41% of its industry peers.
NTES has a better Return On Equity (22.87%) than 87.34% of its industry peers.
NTES's Return On Invested Capital of 17.40% is amongst the best of the industry. NTES outperforms 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 9.15%.
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.
NTES's Profit Margin has declined in the last couple of years.
The Operating Margin of NTES (31.43%) is better than 98.73% of its industry peers.
In the last couple of years the Operating Margin of NTES has grown nicely.
NTES has a better Gross Margin (63.17%) than 72.15% of its industry peers.
NTES's Gross Margin has improved in the last couple of years.
| 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
NTES has a Return on Invested Capital (ROIC), which is well above the Cost of Capital (WACC), which means it is creating value.
Compared to 1 year ago, NTES has less shares outstanding
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 0.25, 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 87.34% of the companies in the same industry.
A Debt/Equity ratio of 0.08 indicates that NTES is not too dependend on debt financing.
The Debt to Equity ratio of NTES (0.08) is better than 62.03% of its industry peers.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Debt/Equity | 0.08 | ||
| Debt/FCF | 0.25 | ||
| Altman-Z | N/A |
ROIC/WACC2.54
WACC6.84%
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.
NTES has a better Current ratio (3.23) than 89.87% of its industry peers.
A Quick Ratio of 3.22 indicates that NTES has no problem at all paying its short term obligations.
With an excellent Quick ratio value of 3.22, NTES belongs to the best of the industry, outperforming 89.87% of the companies in the same industry.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Current Ratio | 3.23 | ||
| Quick Ratio | 3.22 |
3. Growth
3.1 Past
NTES shows a strong growth in Earnings Per Share. In the last year, the EPS has been growing by 18.55%, which is quite good.
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.
The Revenue has been growing slightly by 2.74% in the past 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.
The Revenue is expected to grow by 9.60% on average over the next years. This is quite good.
EPS Next Y21.6%
EPS Next 2Y13.79%
EPS Next 3Y12.28%
EPS Next 5Y-26.15%
Revenue Next Year8.55%
Revenue Next 2Y8.06%
Revenue Next 3Y8.26%
Revenue Next 5Y9.6%
3.3 Evolution
The EPS growth rate is decreasing: in the next years the growth will be less than in the last years.
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
With a Price/Earnings ratio of 17.88, NTES is valued on the expensive side.
NTES's Price/Earnings ratio is rather cheap when compared to the industry. NTES is cheaper than 82.28% of the companies in the same industry.
NTES's Price/Earnings ratio indicates a valuation a bit cheaper than the S&P500 average which is at 27.40.
A Price/Forward Earnings ratio of 15.73 indicates a correct valuation of NTES.
Compared to the rest of the industry, the Price/Forward Earnings ratio of NTES indicates a rather cheap valuation: NTES is cheaper than 88.61% of the companies listed in the same industry.
Compared to an average S&P500 Price/Forward Earnings ratio of 22.94, NTES is valued a bit cheaper.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| PE | 17.88 | ||
| Fwd PE | 15.73 |
4.2 Price Multiples
Based on the Enterprise Value to EBITDA ratio, NTES is valued a bit cheaper than 74.68% of the companies in the same industry.
Based on the Price/Free Cash Flow ratio, NTES is valued cheaper than 86.08% of the companies in the same industry.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| P/FCF | 15.38 | ||
| EV/EBITDA | 12.12 |
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.
The excellent profitability rating of NTES may justify a higher PE ratio.
A more expensive valuation may be justified as NTES's earnings are expected to grow with 12.28% in the coming years.
PEG (NY)0.83
PEG (5Y)1.02
EPS Next 2Y13.79%
EPS Next 3Y12.28%
5. Dividend
5.1 Amount
With a Yearly Dividend Yield of 1.91%, NTES has a reasonable but not impressive dividend return.
Compared to an average industry Dividend Yield of 27.49, NTES pays a better dividend. On top of this NTES pays more dividend than 89.87% of the companies listed in the same industry.
Compared to the average S&P500 Dividend Yield of 2.38, NTES is paying slightly less dividend.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Dividend Yield | 1.91% |
5.2 History
The dividend of NTES has a limited annual growth rate of 4.94%.
NTES has paid a dividend for at least 10 years, which is 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 2Y13.79%
EPS Next 3Y12.28%
148.21
-0.39 (-0.26%)
Chartmill FA Rating
GICS SectorCommunication Services
GICS IndustryGroupMedia & Entertainment
GICS IndustryEntertainment
Earnings (Last)
Earnings (Next)
Inst Owners9.59%
Inst Owner Change0.01%
Ins OwnersN/A
Ins Owner ChangeN/A
Market Cap95.52B
Analysts83.33
Price Target158.83 (7.17%)
Short Float %2.5%
Short Ratio4.2
Dividend
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Dividend Yield | 1.91% |
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)2.06%
PT rev (3m)9.41%
EPS NQ rev (1m)0.25%
EPS NQ rev (3m)0.04%
EPS NY rev (1m)0.3%
EPS NY rev (3m)0.81%
Revenue NQ rev (1m)0%
Revenue NQ rev (3m)0.77%
Revenue NY rev (1m)0%
Revenue NY rev (3m)0.38%
Valuation
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| PE | 17.88 | ||
| Fwd PE | 15.73 | ||
| P/S | 6.21 | ||
| P/FCF | 15.38 | ||
| P/OCF | 14.62 | ||
| P/B | 4.55 | ||
| P/tB | 4.55 | ||
| EV/EBITDA | 12.12 |
EPS(TTM)8.29
EY5.59%
EPS(NY)9.42
Fwd EY6.36%
FCF(TTM)9.64
FCFY6.5%
OCF(TTM)10.14
OCFY6.84%
SpS23.88
BVpS32.57
TBVpS32.57
PEG (NY)0.83
PEG (5Y)1.02
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
WACC6.84%
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 Y21.6%
EPS Next 2Y13.79%
EPS Next 3Y12.28%
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 2Y8.06%
Revenue Next 3Y8.26%
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%