NETEASE INC-ADR (NTES) Stock Fundamental Analysis
NASDAQ:NTES - US64110W1027 - ADR
133.14 USD
-1.7 (-1.26%)
133.14 USD
0 (0%)
We assign a fundamental rating of 7 out of 10 to NTES. 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. NTES may be a bit undervalued, certainly considering the very reasonable score on growth This makes NTES very considerable for value and quality investing!
1. Profitability
1.1 Basic Checks
In the past year NTES was profitable.
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's Return On Assets of 16.41% is amongst the best of the industry. NTES outperforms 94.94% of its industry peers.
NTES's Return On Equity of 22.87% is amongst the best of the industry. NTES outperforms 91.14% of its industry peers.
The Return On Invested Capital of NTES (17.40%) is better than 93.67% of its industry peers.
The Average Return On Invested Capital over the past 3 years for NTES is significantly below the industry average of 20.67%.
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's Profit Margin of 31.19% is amongst the best of the industry. NTES outperforms 97.47% of its industry peers.
In the last couple of years the Profit Margin of NTES has declined.
NTES's Operating Margin of 31.43% is amongst the best of the industry. NTES outperforms 98.73% of its industry peers.
In the last couple of years the Operating Margin of NTES has grown nicely.
The Gross Margin of NTES (63.17%) is better than 69.62% 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.
Compared to 1 year ago, NTES has less shares outstanding
The number of shares outstanding for NTES has been reduced compared to 5 years ago.
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.
NTES has a Debt to FCF ratio of 0.25. This is amongst the best in the industry. NTES outperforms 88.61% 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 62.03% of the companies in the same industry.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Debt/Equity | 0.08 | ||
| Debt/FCF | 0.25 | ||
| Altman-Z | N/A |
ROIC/WACC2.57
WACC6.77%
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.
The Quick ratio of NTES (3.22) is better than 89.87% 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.
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 2.74%.
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)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
NTES is expected to show a very negative growth in Earnings Per Share. In the coming years, the EPS will decrease by -26.01% yearly.
NTES is expected to show quite a strong growth in Revenue. In the coming years, the Revenue will grow by 9.66% yearly.
EPS Next Y21.23%
EPS Next 2Y13.42%
EPS Next 3Y12.44%
EPS Next 5Y-26.01%
Revenue Next Year8.65%
Revenue Next 2Y8.05%
Revenue Next 3Y8.28%
Revenue Next 5Y9.66%
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.
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 16.12, NTES is valued correctly.
NTES's Price/Earnings ratio is rather cheap when compared to the industry. NTES is cheaper than 86.08% of the companies in the same industry.
When comparing the Price/Earnings ratio of NTES to the average of the S&P500 Index (27.03), we can say NTES is valued slightly cheaper.
The Price/Forward Earnings ratio is 14.26, which indicates a correct valuation of NTES.
NTES's Price/Forward Earnings ratio is rather cheap when compared to the industry. NTES is cheaper than 87.34% of the companies in the same industry.
The average S&P500 Price/Forward Earnings ratio is at 22.63. NTES is valued slightly cheaper when compared to this.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| PE | 16.12 | ||
| Fwd PE | 14.26 |
4.2 Price Multiples
79.75% of the companies in the same industry are more expensive than NTES, based on the Enterprise Value to EBITDA ratio.
Based on the Price/Free Cash Flow ratio, NTES is valued cheaply inside the industry as 88.61% of the companies are valued more expensively.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| P/FCF | 13.85 | ||
| EV/EBITDA | 10.44 |
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.
NTES's earnings are expected to grow with 12.44% in the coming years. This may justify a more expensive valuation.
PEG (NY)0.76
PEG (5Y)0.92
EPS Next 2Y13.42%
EPS Next 3Y12.44%
5. Dividend
5.1 Amount
NTES has a Yearly Dividend Yield of 2.10%. Purely for dividend investing, there may be better candidates out there.
NTES's Dividend Yield is rather good when compared to the industry average which is at 6.40. NTES pays more dividend than 92.41% of the companies in the same industry.
Compared to an average S&P500 Dividend Yield of 2.32, NTES has a dividend comparable with the average S&P500 company.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Dividend Yield | 2.1% |
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 2Y13.42%
EPS Next 3Y12.44%
133.14
-1.7 (-1.26%)
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 Cap85.81B
Analysts83.33
Price Target152.94 (14.87%)
Short Float %2.11%
Short Ratio3.51
Dividend
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Dividend Yield | 2.1% |
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)5.3%
PT rev (3m)24.44%
EPS NQ rev (1m)-0.14%
EPS NQ rev (3m)5.75%
EPS NY rev (1m)0.51%
EPS NY rev (3m)11.3%
Revenue NQ rev (1m)1%
Revenue NQ rev (3m)0.55%
Revenue NY rev (1m)0.37%
Revenue NY rev (3m)1.21%
Valuation
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| PE | 16.12 | ||
| Fwd PE | 14.26 | ||
| P/S | 5.59 | ||
| P/FCF | 13.85 | ||
| P/OCF | 13.17 | ||
| P/B | 4.1 | ||
| P/tB | 4.1 | ||
| EV/EBITDA | 10.44 |
EPS(TTM)8.26
EY6.2%
EPS(NY)9.34
Fwd EY7.01%
FCF(TTM)9.61
FCFY7.22%
OCF(TTM)10.11
OCFY7.59%
SpS23.82
BVpS32.48
TBVpS32.48
PEG (NY)0.76
PEG (5Y)0.92
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
WACC6.77%
ROIC/WACC2.57
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-26.01%
Revenue 1Y (TTM)2.74%
Revenue growth 3Y6.32%
Revenue growth 5Y12.19%
Sales Q2Q%9.44%
Revenue Next Year8.65%
Revenue Next 2Y8.05%
Revenue Next 3Y8.28%
Revenue Next 5Y9.66%
EBIT growth 1Y18.69%
EBIT growth 3Y21.69%
EBIT growth 5Y16.49%
EBIT Next Year36.95%
EBIT Next 3Y17.61%
EBIT Next 5Y15.23%
FCF growth 1Y65.97%
FCF growth 3Y19.76%
FCF growth 5Y21.96%
OCF growth 1Y54.29%
OCF growth 3Y16.76%
OCF growth 5Y18.17%