NETEASE INC-ADR (NTES) Stock Fundamental Analysis
NASDAQ:NTES - Nasdaq - US64110W1027 - ADR - Currency: USD
We assign a fundamental rating of 7 out of 10 to NTES. NTES was compared to 72 industry peers in the Entertainment industry. NTES gets an excellent profitability rating and is at the same time showing great financial health properties. NTES is valued quite cheap, while showing a decent growth score. This is a good combination! With these ratings, NTES could be worth investigating further 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
NTES has a better Return On Assets (16.11%) than 95.83% of its industry peers.
The Return On Equity of NTES (22.50%) is better than 90.28% of its industry peers.
NTES's Return On Invested Capital of 17.14% is amongst the best of 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
NTES has a better Profit Margin (30.17%) than 97.22% of its industry peers.
In the last couple of years the Profit Margin of NTES has declined.
NTES's Operating Margin of 30.21% is amongst the best of the industry. NTES outperforms 98.61% of its industry peers.
In the last couple of years the Operating Margin of NTES has grown nicely.
The Gross Margin of NTES (62.71%) is better than 70.83% of its industry peers.
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
The Return on Invested Capital (ROIC) is well above the Cost of Capital (WACC), so NTES is creating value.
The number of shares outstanding for NTES has been reduced compared to 1 year ago.
The number of shares outstanding for NTES has been reduced compared to 5 years ago.
The debt/assets ratio for NTES has been reduced compared to a year ago.
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.
With an excellent Debt to FCF ratio value of 0.25, NTES belongs to the best of the industry, outperforming 90.28% of the companies in the same industry.
NTES has a Debt/Equity ratio of 0.07. This is a healthy value indicating a solid balance between debt and equity.
NTES has a Debt to Equity ratio of 0.07. This is in the better half of the industry: NTES outperforms 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.
A Quick Ratio of 3.20 indicates that NTES has no problem at all paying 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
The Earnings Per Share has grown by an nice 9.01% over the past year.
NTES shows quite a strong growth in Earnings Per Share. Measured over the last years, the EPS has been growing by 17.51% yearly.
NTES shows a small growth in Revenue. In the last year, the Revenue has grown by 1.90%.
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)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
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 16.88, NTES is valued correctly.
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 27.28. NTES is valued slightly cheaper when compared to this.
NTES is valuated correctly with a Price/Forward Earnings ratio of 14.59.
Based on the Price/Forward Earnings ratio, NTES is valued cheaper than 86.11% of the companies in the same industry.
NTES is valuated rather cheaply when we compare the Price/Forward Earnings ratio to 21.76, which is the current average of the S&P500 Index.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| PE | 16.88 | ||
| Fwd PE | 14.59 |
4.2 Price Multiples
Based on the Enterprise Value to EBITDA ratio, NTES is valued a bit cheaper than 79.17% of the companies in the same industry.
86.11% of the companies in the same industry are more expensive than NTES, based on the Price/Free Cash Flow ratio.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| P/FCF | 15.36 | ||
| EV/EBITDA | 10.83 |
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.
PEG (NY)0.85
PEG (5Y)0.96
EPS Next 2Y12.04%
EPS Next 3Y11.36%
5. Dividend
5.1 Amount
NTES has a Yearly Dividend Yield of 2.07%.
NTES's Dividend Yield is rather good when compared to the industry average which is at 6.64. NTES pays more dividend than 90.28% of the companies 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
36.47% of the earnings are spent on dividend by NTES. This is a low number and sustainable payout ratio.
DP36.47%
EPS Next 2Y12.04%
EPS Next 3Y11.36%
NASDAQ:NTES (7/3/2025, 12:26:57 PM)
132.522
-0.48 (-0.36%)
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 Cap85.41B
Analysts83.89
Price Target145.17 (9.54%)
Short Float %1.84%
Short Ratio1.96
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 | 16.88 | ||
| Fwd PE | 14.59 | ||
| P/S | 5.71 | ||
| P/FCF | 15.36 | ||
| P/OCF | 14.5 | ||
| P/B | 4.26 | ||
| P/tB | 4.26 | ||
| EV/EBITDA | 10.83 |
EPS(TTM)7.85
EY5.92%
EPS(NY)9.08
Fwd EY6.85%
FCF(TTM)8.63
FCFY6.51%
OCF(TTM)9.14
OCFY6.9%
SpS23.22
BVpS31.13
TBVpS31.13
PEG (NY)0.85
PEG (5Y)0.96
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%