NETEASE INC-ADR (NTES) Stock Fundamental Analysis
NASDAQ:NTES - Nasdaq - US64110W1027 - ADR - Currency: USD
Taking everything into account, NTES scores 7 out of 10 in our fundamental rating. NTES was compared to 71 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 not valued too expensively and it also shows a decent growth rate. These ratings would make NTES suitable for 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.
In the past 5 years NTES has always 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 15.15%. This is amongst the best in the industry. NTES outperforms 97.18% of its industry peers.
Looking at the Return On Equity, with a value of 21.41%, NTES belongs to the top of the industry, outperforming 91.55% of the companies in the same industry.
Looking at the Return On Invested Capital, with a value of 15.99%, NTES belongs to the top of the industry, outperforming 94.37% of the companies in the same industry.
NTES had an Average Return On Invested Capital over the past 3 years of 14.54%. This is significantly below the industry average of 23.28%.
The 3 year average ROIC (14.54%) for NTES is below the current ROIC(15.99%), indicating increased profibility in the last year.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| ROA | 15.15% | ||
| ROE | 21.41% | ||
| ROIC | 15.99% |
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 (28.20%) than 97.18% of its industry peers.
In the last couple of years the Profit Margin of NTES has declined.
NTES has a better Operating Margin (28.10%) than 98.59% of its industry peers.
NTES's Operating Margin has improved in the last couple of years.
Looking at the Gross Margin, with a value of 62.50%, NTES is in the better half of the industry, outperforming 69.01% of the companies in the same industry.
NTES's Gross Margin has improved in the last couple of years.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| OM | 28.1% | ||
| PM (TTM) | 28.2% | ||
| GM | 62.5% |
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
With a Return on Invested Capital (ROIC) well above the Cost of Capital (WACC), 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 an Altman-Z score of 8.51. This indicates that NTES is financially healthy and has little risk of bankruptcy at the moment.
NTES has a better Altman-Z score (8.51) than 92.96% of its industry peers.
NTES has a debt to FCF ratio of 0.33. This is a very positive value and a sign of high solvency as it would only need 0.33 years to pay back of all of its debts.
With an excellent Debt to FCF ratio value of 0.33, NTES belongs to the best of the industry, outperforming 87.32% of the companies in the same industry.
NTES has a Debt/Equity ratio of 0.09. This is a healthy value indicating a solid balance between debt and equity.
NTES has a Debt to Equity ratio of 0.09. This is in the better half of the industry: NTES outperforms 67.61% of its industry peers.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Debt/Equity | 0.09 | ||
| Debt/FCF | 0.33 | ||
| Altman-Z | 8.51 |
ROIC/WACC2.16
WACC7.4%
2.3 Liquidity
A Current Ratio of 3.09 indicates that NTES has no problem at all paying its short term obligations.
NTES has a Current ratio of 3.09. This is amongst the best in the industry. NTES outperforms 87.32% of its industry peers.
NTES has a Quick Ratio of 3.08. This indicates that NTES is financially healthy and has no problem in meeting its short term obligations.
NTES has a better Quick ratio (3.08) than 87.32% of its industry peers.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Current Ratio | 3.09 | ||
| Quick Ratio | 3.08 |
3. Growth
3.1 Past
The Earnings Per Share has grown by an nice 8.75% 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 1.77% in the last year.
NTES shows quite a strong growth in Revenue. Measured over the last years, the Revenue has been growing by 12.19% yearly.
EPS 1Y (TTM)8.75%
EPS 3Y21.03%
EPS 5Y17.51%
EPS Q2Q%32.65%
Revenue 1Y (TTM)1.77%
Revenue growth 3Y6.32%
Revenue growth 5Y12.19%
Sales Q2Q%6.68%
3.2 Future
The Earnings Per Share is expected to decrease by -26.55% on average over the next years. This is quite bad
The Revenue is expected to grow by 9.73% on average over the next years. This is quite good.
EPS Next Y8.93%
EPS Next 2Y8.5%
EPS Next 3Y8.63%
EPS Next 5Y-26.55%
Revenue Next Year7.35%
Revenue Next 2Y7.04%
Revenue Next 3Y7.45%
Revenue Next 5Y9.73%
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 15.55, NTES is valued correctly.
NTES's Price/Earnings ratio is rather cheap when compared to the industry. NTES is cheaper than 87.32% of the companies in the same industry.
Compared to an average S&P500 Price/Earnings ratio of 26.60, NTES is valued a bit cheaper.
The Price/Forward Earnings ratio is 14.30, which indicates a correct valuation of NTES.
Based on the Price/Forward Earnings ratio, NTES is valued cheaply inside the industry as 88.73% of the companies are valued more expensively.
The average S&P500 Price/Forward Earnings ratio is at 22.43. NTES is valued slightly cheaper when compared to this.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| PE | 15.55 | ||
| Fwd PE | 14.3 |
4.2 Price Multiples
Compared to the rest of the industry, the Enterprise Value to EBITDA ratio of NTES indicates a somewhat cheap valuation: NTES is cheaper than 77.46% of the companies listed in the same industry.
Compared to the rest of the industry, the Price/Free Cash Flow ratio of NTES indicates a rather cheap valuation: NTES is cheaper than 83.10% of the companies listed in the same industry.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| P/FCF | 15.02 | ||
| EV/EBITDA | 10.61 |
4.3 Compensation for Growth
NTES's PEG Ratio(NY), which compensates the Price/Earnings for growth, indicates a correct valuation of the company.
The excellent profitability rating of NTES may justify a higher PE ratio.
PEG (NY)1.74
PEG (5Y)0.89
EPS Next 2Y8.5%
EPS Next 3Y8.63%
5. Dividend
5.1 Amount
NTES has a Yearly Dividend Yield of 2.73%. Purely for dividend investing, there may be better candidates out there.
Compared to an average industry Dividend Yield of 6.59, NTES pays a better dividend. On top of this NTES pays more dividend than 91.55% of the companies listed in the same industry.
Compared to an average S&P500 Dividend Yield of 2.36, NTES has a dividend comparable with the average S&P500 company.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Dividend Yield | 2.73% |
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
37.60% of the earnings are spent on dividend by NTES. This is a low number and sustainable payout ratio.
DP37.6%
EPS Next 2Y8.5%
EPS Next 3Y8.63%
120.99
+1.89 (+1.59%)
Chartmill FA Rating
GICS SectorCommunication Services
GICS IndustryGroupMedia & Entertainment
GICS IndustryEntertainment
Earnings (Last)
Earnings (Next)
Inst Owners12.92%
Inst Owner Change1.25%
Ins OwnersN/A
Ins Owner ChangeN/A
Market Cap77.98B
Analysts84
Price Target122.9 (1.58%)
Short Float %2.08%
Short Ratio1.72
Dividend
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Dividend Yield | 2.73% |
Yearly Dividend2.41
Dividend Growth(5Y)4.94%
DP37.6%
Div Incr Years3
Div Non Decr Years3
Ex-Date
Surprises & Revisions
EPS beat(2)1
Avg EPS beat(2)3.67%
Min EPS beat(2)-8.86%
Max EPS beat(2)16.21%
EPS beat(4)2
Avg EPS beat(4)1.54%
Min EPS beat(4)-8.86%
Max EPS beat(4)16.21%
EPS beat(8)5
Avg EPS beat(8)12.3%
EPS beat(12)8
Avg EPS beat(12)13.73%
EPS beat(16)11
Avg EPS beat(16)14.13%
Revenue beat(2)0
Avg Revenue beat(2)-3.79%
Min Revenue beat(2)-4.07%
Max Revenue beat(2)-3.51%
Revenue beat(4)0
Avg Revenue beat(4)-3.34%
Min Revenue beat(4)-4.07%
Max Revenue beat(4)-2.09%
Revenue beat(8)0
Avg Revenue beat(8)-3.82%
Revenue beat(12)1
Avg Revenue beat(12)-2.68%
Revenue beat(16)2
Avg Revenue beat(16)-2.05%
PT rev (1m)0.11%
PT rev (3m)4.09%
EPS NQ rev (1m)0.07%
EPS NQ rev (3m)-2.88%
EPS NY rev (1m)-0.07%
EPS NY rev (3m)1.29%
Revenue NQ rev (1m)-0.44%
Revenue NQ rev (3m)-4.47%
Revenue NY rev (1m)-0.26%
Revenue NY rev (3m)-0.83%
Valuation
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| PE | 15.55 | ||
| Fwd PE | 14.3 | ||
| P/S | 5.35 | ||
| P/FCF | 15.02 | ||
| P/OCF | 14.19 | ||
| P/B | 4.06 | ||
| P/tB | 4.06 | ||
| EV/EBITDA | 10.61 |
EPS(TTM)7.78
EY6.43%
EPS(NY)8.46
Fwd EY6.99%
FCF(TTM)8.05
FCFY6.66%
OCF(TTM)8.53
OCFY7.05%
SpS22.63
BVpS29.81
TBVpS29.81
PEG (NY)1.74
PEG (5Y)0.89
Profitability
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| ROA | 15.15% | ||
| ROE | 21.41% | ||
| ROCE | 20.22% | ||
| ROIC | 15.99% | ||
| ROICexc | 123.03% | ||
| ROICexgc | 123.03% | ||
| OM | 28.1% | ||
| PM (TTM) | 28.2% | ||
| GM | 62.5% | ||
| FCFM | 35.59% |
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-Score7
Asset Turnover0.54
Health
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Debt/Equity | 0.09 | ||
| Debt/FCF | 0.33 | ||
| Debt/EBITDA | 0.38 | ||
| Cap/Depr | 91.25% | ||
| Cap/Sales | 2.1% | ||
| Interest Coverage | 60.42 | ||
| Cash Conversion | 123.98% | ||
| Profit Quality | 126.17% | ||
| Current Ratio | 3.09 | ||
| Quick Ratio | 3.08 | ||
| Altman-Z | 8.51 |
F-Score7
WACC7.4%
ROIC/WACC2.16
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)8.75%
EPS 3Y21.03%
EPS 5Y17.51%
EPS Q2Q%32.65%
EPS Next Y8.93%
EPS Next 2Y8.5%
EPS Next 3Y8.63%
EPS Next 5Y-26.55%
Revenue 1Y (TTM)1.77%
Revenue growth 3Y6.32%
Revenue growth 5Y12.19%
Sales Q2Q%6.68%
Revenue Next Year7.35%
Revenue Next 2Y7.04%
Revenue Next 3Y7.45%
Revenue Next 5Y9.73%
EBIT growth 1Y6.77%
EBIT growth 3Y21.69%
EBIT growth 5Y16.49%
EBIT Next Year26.39%
EBIT Next 3Y14.49%
EBIT Next 5Y15.19%
FCF growth 1Y20.66%
FCF growth 3Y19.76%
FCF growth 5Y21.96%
OCF growth 1Y12.3%
OCF growth 3Y16.76%
OCF growth 5Y18.17%