NETEASE INC-ADR (NTES) Stock Fundamental Analysis
NASDAQ:NTES - Nasdaq - US64110W1027 - ADR - Currency: USD
Taking everything into account, NTES scores 6 out of 10 in our fundamental rating. NTES was compared to 71 industry peers in the Entertainment industry. NTES has outstanding health and profitabily ratings, belonging to the best of the industry. This is a solid base for any company. NTES is cheap, but on the other hand it scores bad on growth. These ratings could make NTES a good candidate for value 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.
Of the past 5 years NTES 4 years were profitable.
Of the past 5 years NTES 4 years had a positive operating cash flow.
1.2 Ratios
NTES has a better Return On Assets (14.88%) than 93.94% of its industry peers.
The Return On Equity of NTES (20.82%) is better than 87.88% of its industry peers.
With an excellent Return On Invested Capital value of 15.81%, NTES belongs to the best of the industry, outperforming 95.45% of the companies in the same industry.
NTES had an Average Return On Invested Capital over the past 3 years of 12.62%. This is significantly below the industry average of 91.11%.
The 3 year average ROIC (12.62%) for NTES is below the current ROIC(15.81%), indicating increased profibility in the last year.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| ROA | 14.88% | ||
| ROE | 20.82% | ||
| ROIC | 15.81% |
ROA(3y)12.86%
ROA(5y)13.2%
ROE(3y)20.26%
ROE(5y)22%
ROIC(3y)12.62%
ROIC(5y)12.18%
1.3 Margins
Looking at the Profit Margin, with a value of 26.03%, NTES belongs to the top of the industry, outperforming 95.45% of the companies in the same industry.
NTES's Profit Margin has improved in the last couple of years.
The Operating Margin of NTES (27.09%) is better than 98.48% of its industry peers.
In the last couple of years the Operating Margin of NTES has grown nicely.
The Gross Margin of NTES (62.79%) is better than 71.21% of its industry peers.
NTES's Gross Margin has improved in the last couple of years.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| OM | 27.09% | ||
| PM (TTM) | 26.03% | ||
| GM | 62.79% |
OM growth 3Y10.71%
OM growth 5Y6.56%
PM growth 3Y20.19%
PM growth 5Y18.79%
GM growth 3Y4.82%
GM growth 5Y2.67%
2. Health
2.1 Basic Checks
With a Return on Invested Capital (ROIC) well above the Cost of Capital (WACC), NTES is creating value.
There is no outstanding debt for NTES. This means it has a Debt/Equity and Debt/FCF ratio of 0 and it is amongst the best of the sector and industry.
2.2 Solvency
The Debt to FCF ratio of NTES is 0.31, which is an excellent value as it means it would take NTES, only 0.31 years of fcf income to pay off all of its debts.
The Debt to FCF ratio of NTES (0.31) is better than 89.39% 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 71.21% of the companies in the same industry.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Debt/Equity | 0.08 | ||
| Debt/FCF | 0.31 | ||
| Altman-Z | N/A |
ROIC/WACC2.16
WACC7.32%
2.3 Liquidity
A Current Ratio of 3.08 indicates that NTES has no problem at all paying its short term obligations.
NTES has a better Current ratio (3.08) than 83.33% of its industry peers.
A Quick Ratio of 3.06 indicates that NTES has no problem at all paying its short term obligations.
NTES has a better Quick ratio (3.06) than 83.33% of its industry peers.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Current Ratio | 3.08 | ||
| Quick Ratio | 3.06 |
3. Growth
3.1 Past
The Earnings Per Share has been growing slightly by 3.30% 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 17.48% on average per year.
EPS 1Y (TTM)3.3%
EPS 3Y20.98%
EPS 5Y17.48%
EPS Q2Q%32.38%
Revenue 1Y (TTM)N/A
Revenue growth 3YN/A
Revenue growth 5YN/A
Sales Q2Q%-2%
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 -37.38% 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 9.33% on average per year.
EPS Next Y7.68%
EPS Next 2Y8.25%
EPS Next 3Y-37.38%
EPS Next 5YN/A
Revenue Next Year8.32%
Revenue Next 2Y7.99%
Revenue Next 3Y9.37%
Revenue Next 5Y9.33%
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.
4. Valuation
4.1 Price/Earnings Ratio
Based on the Price/Earnings ratio of 14.46, the valuation of NTES can be described as correct.
Based on the Price/Earnings ratio, NTES is valued cheaply inside the industry as 86.36% of the companies are valued more expensively.
Compared to an average S&P500 Price/Earnings ratio of 29.63, NTES is valued rather cheaply.
Based on the Price/Forward Earnings ratio of 13.43, the valuation of NTES can be described as correct.
NTES's Price/Forward Earnings ratio is rather cheap when compared to the industry. NTES is cheaper than 89.39% of the companies in the same industry.
NTES is valuated rather cheaply when we compare the Price/Forward Earnings ratio to 22.68, which is the current average of the S&P500 Index.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| PE | 14.46 | ||
| Fwd PE | 13.43 |
4.2 Price Multiples
NTES's Enterprise Value to EBITDA ratio is rather cheap when compared to the industry. NTES is cheaper than 83.33% 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 84.85% of the companies in the same industry.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| P/FCF | 13.38 | ||
| EV/EBITDA | 7.97 |
4.3 Compensation for Growth
The high PEG Ratio(NY), which compensates the Price/Earnings for growth, indicates an expensive valuation of the company.
The excellent profitability rating of NTES may justify a higher PE ratio.
NTES's earnings are expected to decrease with -37.38% in the coming years. This may justify a cheaper valuation.
PEG (NY)1.88
PEG (5Y)0.83
EPS Next 2Y8.25%
EPS Next 3Y-37.38%
5. Dividend
5.1 Amount
With a Yearly Dividend Yield of 2.34%, NTES has a reasonable but not impressive dividend return.
NTES's Dividend Yield is rather good when compared to the industry average which is at 3.65. NTES pays more dividend than 93.94% of the companies in the same industry.
Compared to an average S&P500 Dividend Yield of 2.29, NTES has a dividend comparable with the average S&P500 company.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Dividend Yield | 2.34% |
5.2 History
The dividend of NTES is nicely growing with an annual growth rate of 41.17%!
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)41.17%
Div Incr Years3
Div Non Decr Years3
5.3 Sustainability
41.59% of the earnings are spent on dividend by NTES. This is a bit on the high side, but may be sustainable.
DP41.59%
EPS Next 2Y8.25%
EPS Next 3Y-37.38%
103.22
+1.8 (+1.77%)
Chartmill FA Rating
GICS SectorCommunication Services
GICS IndustryGroupMedia & Entertainment
GICS IndustryEntertainment
Earnings (Last)
Earnings (Next)
Inst Owners11.8%
Inst Owner Change6.38%
Ins OwnersN/A
Ins Owner ChangeN/A
Market Cap66.52B
Analysts84.74
Price Target119.02 (15.31%)
Short Float %3.33%
Short Ratio3.43
Dividend
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Dividend Yield | 2.34% |
Yearly Dividend2.49
Dividend Growth(5Y)41.17%
DP41.59%
Div Incr Years3
Div Non Decr Years3
Ex-DateN/A
Surprises & Revisions
EPS beat(2)0
Avg EPS beat(2)-5.64%
Min EPS beat(2)-8.86%
Max EPS beat(2)-2.42%
EPS beat(4)1
Avg EPS beat(4)-4.95%
Min EPS beat(4)-9.75%
Max EPS beat(4)1.23%
EPS beat(8)4
Avg EPS beat(8)9.04%
EPS beat(12)8
Avg EPS beat(12)16.17%
EPS beat(16)10
Avg EPS beat(16)11.81%
Revenue beat(2)0
Avg Revenue beat(2)-3.87%
Min Revenue beat(2)-4.07%
Max Revenue beat(2)-3.67%
Revenue beat(4)0
Avg Revenue beat(4)-3.97%
Min Revenue beat(4)-6.06%
Max Revenue beat(4)-2.09%
Revenue beat(8)0
Avg Revenue beat(8)-3.62%
Revenue beat(12)1
Avg Revenue beat(12)-2.46%
Revenue beat(16)2
Avg Revenue beat(16)-1.96%
PT rev (1m)2.37%
PT rev (3m)0.17%
EPS NQ rev (1m)1.47%
EPS NQ rev (3m)-6.02%
EPS NY rev (1m)0.07%
EPS NY rev (3m)-0.57%
Revenue NQ rev (1m)-0.48%
Revenue NQ rev (3m)-9.69%
Revenue NY rev (1m)0.03%
Revenue NY rev (3m)-0.67%
Valuation
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| PE | 14.46 | ||
| Fwd PE | 13.43 | ||
| P/S | 4.57 | ||
| P/FCF | 13.38 | ||
| P/OCF | 12.55 | ||
| P/B | 3.65 | ||
| P/tB | 3.65 | ||
| EV/EBITDA | 7.97 |
EPS(TTM)7.14
EY6.92%
EPS(NY)7.68
Fwd EY7.44%
FCF(TTM)7.71
FCFY7.47%
OCF(TTM)8.22
OCFY7.97%
SpS22.59
BVpS28.25
TBVpS28.25
PEG (NY)1.88
PEG (5Y)0.83
Profitability
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| ROA | 14.88% | ||
| ROE | 20.82% | ||
| ROCE | 20.57% | ||
| ROIC | 15.81% | ||
| ROICexc | 91.83% | ||
| ROICexgc | 91.83% | ||
| OM | 27.09% | ||
| PM (TTM) | 26.03% | ||
| GM | 62.79% | ||
| FCFM | 34.15% |
ROA(3y)12.86%
ROA(5y)13.2%
ROE(3y)20.26%
ROE(5y)22%
ROIC(3y)12.62%
ROIC(5y)12.18%
ROICexc(3y)73.41%
ROICexc(5y)67.64%
ROICexgc(3y)87.4%
ROICexgc(5y)82.01%
ROCE(3y)17.94%
ROCE(5y)17.56%
ROICexcg growth 3Y15.18%
ROICexcg growth 5Y16.26%
ROICexc growth 3Y17.92%
ROICexc growth 5Y12.49%
OM growth 3Y10.71%
OM growth 5Y6.56%
PM growth 3Y20.19%
PM growth 5Y18.79%
GM growth 3Y4.82%
GM growth 5Y2.67%
F-Score7
Asset Turnover0.57
Health
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Debt/Equity | 0.08 | ||
| Debt/FCF | 0.31 | ||
| Debt/EBITDA | 0.36 | ||
| Cap/Depr | 100.02% | ||
| Cap/Sales | 2.25% | ||
| Interest Coverage | 53.3 | ||
| Cash Conversion | 124.06% | ||
| Profit Quality | 131.18% | ||
| Current Ratio | 3.08 | ||
| Quick Ratio | 3.06 | ||
| Altman-Z | N/A |
F-Score7
WACC7.32%
ROIC/WACC2.16
Cap/Depr(3y)109.12%
Cap/Depr(5y)109.97%
Cap/Sales(3y)3.47%
Cap/Sales(5y)4.1%
Profit Quality(3y)119.41%
Profit Quality(5y)120.54%
High Growth Momentum
Growth
EPS 1Y (TTM)3.3%
EPS 3Y20.98%
EPS 5Y17.48%
EPS Q2Q%32.38%
EPS Next Y7.68%
EPS Next 2Y8.25%
EPS Next 3Y-37.38%
EPS Next 5YN/A
Revenue 1Y (TTM)N/A
Revenue growth 3YN/A
Revenue growth 5YN/A
Sales Q2Q%-2%
Revenue Next Year8.32%
Revenue Next 2Y7.99%
Revenue Next 3Y9.37%
Revenue Next 5Y9.33%
EBIT growth 1Y13.28%
EBIT growth 3Y23.98%
EBIT growth 5Y22.67%
EBIT Next Year10.18%
EBIT Next 3Y10.93%
EBIT Next 5Y13.05%
FCF growth 1Y49.16%
FCF growth 3Y12.87%
FCF growth 5Y36.6%
OCF growth 1Y42.13%
OCF growth 3Y12.39%
OCF growth 5Y21.37%