NetEase Inc

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NTES : NASDAQ : Technology
$328.15 up 2.9 | 0.88%
Today's Range: 319.0011 - 329.67
Avg. Daily Volume: 1266400.0
06/23/17 - 2:09 PM ET

Financial Analysis


NETEASE INC's gross profit margin for the first quarter of its fiscal year 2017 is essentially unchanged when compared to the same period a year ago. The company has grown sales and net income significantly, outpacing the average growth rates of competitors within its industry. NETEASE INC is extremely liquid. Currently, the Quick Ratio is 2.36 which clearly shows the ability to cover any short-term cash needs. The company's liquidity has decreased from the same period last year.

At the same time, stockholders' equity ("net worth") has greatly increased by 25.67% from the same quarter last year. Overall, the key liquidity measurements indicate that the company is very unlikely to face financial difficulties in the near future.

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Income Statement Q1 FY17 Q1 FY16
Net Sales ($mil)1981.721227.57
EBITDA ($mil)714.51454.69
EBIT ($mil)693.27444.74
Net Income ($mil)569.9381.64


Balance Sheet Q1 FY17 Q1 FY16
Cash & Equiv. ($mil)6382.234564.22
Total Assets ($mil)9131.66705.72
Total Debt ($mil)651.36350.72
Equity ($mil)6046.64811.41


Profitability Q1 FY17 Q1 FY16
Gross Profit Margin55.9358.76
EBITDA Margin36.0537.03
Operating Margin34.9836.23
Sales Turnover0.680.62
Return on Assets20.3618.15
Return on Equity30.7525.3
Debt Q1 FY17 Q1 FY16
Current Ratio2.683.01
Debt/Capital0.10.07
Interest Expense0.00.0
Interest Coverage0.00.0


Share Data Q1 FY17 Q1 FY16
Shares outstanding (mil)131.26131.48
Div / share1.010.64
EPS4.292.88
Book value / share46.0736.6
Institutional Own % n/a n/a
Avg Daily Volume1251285.01090458.0

Valuation


BUY. The current P/E ratio indicates a significant discount compared to an average of 37.96 for the Internet Software & Services industry and a discount compared to the S&P 500 average of 25.73. Conducting a second comparison, its price-to-book ratio of 6.35 indicates a significant premium versus the S&P 500 average of 3.08 and a premium versus the industry average of 6.00. The price-to-sales ratio is well above the S&P 500 average, but well below the industry average. The valuation analysis reveals that, NETEASE INC seems to be trading at a discount to investment alternatives within the industry.


Price/Earnings
1 2 3 4 5
premium   discount
  Price/Cash Flow
1 2 3 4 5
premium   discount
NTES 20.85 Peers 37.96   NTES 16.43 Peers 24.92

Discount. A lower P/E ratio than its peers can signify a less expensive stock or lower growth expectations.

NTES is trading at a significant discount to its peers.

 

Discount. The P/CF ratio, a stock’s price divided by the company's cash flow from operations, is useful for comparing companies with different capital requirements or financing structures.

NTES is trading at a significant discount to its peers.

 
Price/Projected
Earnings
1 2 3 4 5
premium   discount
  Price to
Earnings/Growth
1 2 3 4 5
premium   discount
NTES 2.41 Peers 18.66   NTES 0.03 Peers 0.38

Discount. A lower price-to-projected earnings ratio than its peers can signify a less expensive stock or lower future growth expectations.

NTES is trading at a significant discount to its peers.

 

Discount. The PEG ratio is the stock’s P/E divided by the consensus estimate of long-term earnings growth. Faster growth can justify higher price multiples.

NTES trades at a significant discount to its peers.

 
Price/Book
1 2 3 4 5
premium   discount
  Earnings Growth
1 2 3 4 5
lower   higher
NTES 6.35 Peers 6.00   NTES 52.60 Peers 39.26

Average. A lower price-to-book ratio makes a stock more attractive to investors seeking stocks with lower market values per dollar of equity on the balance sheet.

NTES is trading at a valuation on par with its peers.

 

Higher. Elevated earnings growth rates can lead to capital appreciation and justify higher price-to-earnings ratios.

NTES is expected to have an earnings growth rate that significantly exceeds its peers.

 
Price/Sales
1 2 3 4 5
premium   discount
  Sales Growth
1 2 3 4 5
premium   discount
NTES 6.14 Peers 10.00   NTES 50.41 Peers 31.30

Discount. In the absence of P/E and P/B multiples, the price-to-sales ratio can display the value investors are placing on each dollar of sales.

NTES is trading at a significant discount to its industry on this measurement.

 

Higher. A sales growth rate that exceeds the industry implies that a company is gaining market share.

NTES has a sales growth rate that significantly exceeds its peers.

 

 

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