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NetEase (NTES) Stock Analysis

Here is a fundamental analysis of NetEase (NTES), benchmarking its profitability, financial strength, dividend and valuation against its industry group peers.

Performance

Cumulative Growth

NTES
GSPC
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NetEase (NTES) vs. S&P 500 (GSPC): Growth of a $10,000 investment over the past five years. Adjusted for dividends and splits.

Trailing Returns

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Trailing total returns for NetEase (NTES) and S&P 500 (GSPC). Returns over one year are annualized.

Performance at a Glance

NetEase (NTES) metric values compared with Media & Entertainment industry-group medians
MetricCurrent stock: NTESIndustry group median
1-Year Return-2.91%-4.70%

Risk

Drawdown

NTES
GSPC
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NetEase (NTES) vs. S&P 500 (GSPC): Drawdown from the running peak over the past five years. Each line shows the decline from its prior peak; 0% marks a new high.

Risk at a Glance

NetEase (NTES) metric values compared with Media & Entertainment industry-group medians
MetricCurrent stock: NTESIndustry group median
1-Year Volatility29.37%46.11%
Beta0.710.96

Company Profile

NetEase (NTES) trades as an ADR rather than ordinary local shares — read it with FX exposure, depositary-program fees, and dividend-withholding-tax differences in mind.

Company profile fields for NetEase (NTES)
Profile ItemNTES
NameNetEase, Inc. American Depositary Receipt
Country/RegionChina
GICS SectorCommunication Services
GICS Industry GroupMedia & Entertainment
GICS IndustryEntertainment
GICS Sub-IndustryInteractive Home Entertainment
Market Capitalization80.61 billion USD
CurrencyUSD
ExchangeNasdaq
Listing DateJune 30, 2000
Security TypeADR

Valuation

Price-to-Earnings Ratio (TTM)

NetEase (NTES) trades at P/E ratio of 16.11, near the industry’s usual earnings multiple. The stock is not showing a clear peer discount or premium on trailing earnings.

NTES

Media & Entertainment industry group

16.11

Group distribution
Max
71.35
Q3
37.05
Median
21.91
NTES
16.11
Q1
11.66
Min
1.74
Largest peers
SPOT
32.46
GOOGL
27.48
GOOG
27.32
NFLX
25.92
META
20.62
NTES
16.11
DIS
16.01
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Where NetEase (NTES) stands on P/E ratio within its Media & Entertainment peer group — the box is the group’s distribution and the dots its largest members.

Price-to-Sales Ratio (TTM)

NetEase (NTES) trades at 0.70 on P/S ratio, roughly in the peer group’s normal range. The market is not making a strong cheap-or-rich statement about its revenue base.

NTES

Media & Entertainment industry group

0.70

Group distribution
Max
8.58
Q3
3.91
Median
1.48
NTES
0.70
Q1
0.55
Min
0.00
Largest peers
GOOGL
10.38
GOOG
10.34
NFLX
7.21
META
6.70
SPOT
5.65
DIS
1.79
NTES
0.70
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Where NetEase (NTES) stands on P/S ratio within its Media & Entertainment peer group — the box is the group’s distribution and the dots its largest members.

Price-to-Book Ratio (MRQ)

NetEase (NTES) trades at 16.55 on P/B ratio, above the industry benchmark range. Investors are putting an unusually rich price on each dollar of book equity relative to peers.

NTES

Media & Entertainment industry group

16.55

Group distribution
NTES
16.55
Max
11.21
Q3
5.56
Median
1.93
Q1
0.82
Min
-2.89
Largest peers
NTES
16.55
NFLX
10.87
SPOT
10.10
GOOGL
9.10
GOOG
9.06
META
5.91
DIS
1.61
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Where NetEase (NTES) stands on P/B ratio within its Media & Entertainment peer group — the box is the group’s distribution and the dots its largest members.

Valuation at a Glance

NetEase (NTES) metric values compared with Media & Entertainment industry-group medians
MetricCurrent stock: NTESIndustry group median
Price-to-Earnings Ratio (TTM)16.1121.91
Price-to-Sales Ratio (TTM)0.701.48
Price-to-Book Ratio (MRQ)16.551.93
Free Cash Flow Yield42.36%7.41%

Profitability

Return on Equity (TTM)

NetEase (NTES) posts ROE of 22.13%, in the upper peer quartile. That suggests the company earns more from each dollar of shareholders’ equity than most industry peers, a useful capital-efficiency signal.

NTES

Media & Entertainment industry group

22.13%

Group distribution
Max
46.65%
NTES
22.13%
Q3
16.35%
Median
6.52%
Q1
-4.21%
Min
-29.59%
Largest peers
NFLX
48.50%
GOOGL
38.89%
GOOG
38.89%
SPOT
37.99%
META
32.93%
NTES
22.13%
DIS
11.01%
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Where NetEase (NTES) stands on ROE within its Media & Entertainment peer group — the box is the group’s distribution and the dots its largest members.

Net Profit Margin (TTM)

NetEase (NTES) keeps 29.84% of revenue as net profit, putting net margin in the upper peer quartile. After operating costs, interest, and taxes, more of each sales dollar reaches shareholders than it does at most industry peers.

NTES

Media & Entertainment industry group

29.84%

Group distribution
Max
30.77%
NTES
29.84%
Q3
10.51%
Median
3.81%
Q1
-3.12%
Min
-20.69%
Largest peers
GOOGL
37.92%
GOOG
37.92%
META
32.84%
NTES
29.84%
NFLX
28.52%
SPOT
15.45%
DIS
11.54%
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Where NetEase (NTES) stands on net margin within its Media & Entertainment peer group — the box is the group’s distribution and the dots its largest members.

Operating Profit Margin (TTM)

NetEase (NTES) turns 41.37% of revenue into operating profit, putting operating margin in the upper peer quartile. Before financing and taxes enter the picture, the day-to-day business keeps more of each sales dollar than most industry peers.

NTES

Media & Entertainment industry group

41.37%

Group distribution
NTES
41.37%
Max
41.37%
Q3
16.41%
Median
8.47%
Q1
-3.09%
Min
-26.23%
Largest peers
NTES
41.37%
META
40.62%
GOOGL
36.12%
GOOG
36.12%
NFLX
32.30%
SPOT
15.77%
DIS
15.51%
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Where NetEase (NTES) stands on operating margin within its Media & Entertainment peer group — the box is the group’s distribution and the dots its largest members.

Profitability at a Glance

NetEase (NTES) metric values compared with Media & Entertainment industry-group medians
MetricCurrent stock: NTESIndustry group median
Return on Equity (TTM)22.13%6.52%
Return on Assets (TTM)11.00%3.34%
Net Profit Margin (TTM)29.84%3.81%
Operating Profit Margin (TTM)41.37%8.47%
Gross Profit Margin (TTM)65.69%52.29%

Financial Strength

Current Ratio (MRQ)

NetEase (NTES) has current ratio of 3.29, above the industry’s typical middle range. Liquidity looks ample versus peers, though an unusually high cushion can also mean idle current assets or inefficient working capital.

NTES

Media & Entertainment industry group

3.29

Group distribution
Max
4.23
NTES
3.29
Q3
2.26
Median
1.36
Q1
0.89
Min
0.31
Largest peers
NTES
3.29
META
2.35
SPOT
2.06
GOOGL
1.92
GOOG
1.92
NFLX
1.41
DIS
0.68
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Where NetEase (NTES) stands on current ratio within its Media & Entertainment peer group — the box is the group’s distribution and the dots its largest members.

Debt-to-Equity Ratio (MRQ)

NetEase (NTES) has debt-to-equity ratio of 0.06, in the lower-leverage quartile for its industry. Borrowing is modest relative to equity compared with most peers, which can leave more flexibility through a cycle.

NTES

Media & Entertainment industry group

0.06

Group distribution
Max
2.46
Q3
1.30
Median
0.54
Q1
0.17
NTES
0.06
Min
0.00
Largest peers
NFLX
0.54
DIS
0.41
META
0.36
GOOGL
0.20
GOOG
0.20
NTES
0.06
SPOT
0.06
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Where NetEase (NTES) stands on debt-to-equity ratio within its Media & Entertainment peer group — the box is the group’s distribution and the dots its largest members.

Financial Strength at a Glance

NetEase (NTES) metric values compared with Media & Entertainment industry-group medians
MetricCurrent stock: NTESIndustry group median
Current Ratio (MRQ)3.291.36
Debt-to-Equity Ratio (MRQ)0.060.54
Net Debt / EBITDA-3.971.34

Dividends

Dividend Yield (TTM)

NetEase (NTES) has dividend yield of 2.40%, in the upper peer-yield quartile while still inside the industry range. The dividend offers more cash income per dollar of share price than most peers, though payout coverage still matters.

NTES

Media & Entertainment industry group

2.40%

Group distribution
Max
2.67%
NTES
2.40%
Q3
1.17%
Median
0.00%
Q1
0.00%
Min
0.00%
Largest peers
NTES
2.40%
DIS
1.50%
META
0.37%
GOOG
0.25%
GOOGL
0.24%
NFLX
0.00%
SPOT
0.00%
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Where NetEase (NTES) stands on dividend yield within its Media & Entertainment peer group — the box is the group’s distribution and the dots its largest members.

Dividend Payout Ratio (TTM)

NetEase (NTES) has payout ratio of 39.66%, above the industry’s usual payout band. A larger share of earnings is going to dividends, so the cushion narrows if profit weakens.

NTES

Media & Entertainment industry group

39.66%

Group distribution
Max
57.34%
NTES
39.66%
Q3
24.40%
Median
0.00%
Q1
0.00%
Min
0.00%
Largest peers
NTES
39.66%
DIS
20.00%
META
7.64%
GOOGL
6.41%
GOOG
6.41%
NFLX
0.00%
SPOT
0.00%
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Where NetEase (NTES) stands on payout ratio within its Media & Entertainment peer group — the box is the group’s distribution and the dots its largest members.

Dividends at a Glance

NetEase (NTES) metric values compared with Media & Entertainment industry-group medians
MetricCurrent stock: NTESIndustry group median
Dividend Yield (TTM)2.40%0.00%
Dividend Payout Ratio (TTM)39.66%0.00%