NetEase Inc

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NTES : NASDAQ : Technology
$196.02 | %
Today's Range: 194.40 - 198.48
Avg. Daily Volume: 1,364,700
07/22/16 - 4:00 PM ET

Financial Analysis


NETEASE INC's gross profit margin for the first quarter of its fiscal year 2016 has decreased 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 2.65 which clearly shows the ability to cover any short-term cash needs. The company's liquidity has decreased from the same period last year.

During the same period, stockholders' equity ("net worth") has increased by 21.20% 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 FY16 Q1 FY15
Net Sales ($mil)1227.57590.46
EBITDA ($mil)454.69218.47
EBIT ($mil)444.74212.23
Net Income ($mil)381.64203.97


Balance Sheet Q1 FY16 Q1 FY15
Cash & Equiv. ($mil)4564.224211.42
Total Assets ($mil)6705.725064.81
Total Debt ($mil)350.72198.15
Equity ($mil)4811.413969.52


Profitability Q1 FY16 Q1 FY15
Gross Profit Margin58.7669.06
EBITDA Margin37.0337.0
Operating Margin36.2335.94
Sales Turnover0.620.41
Return on Assets18.1515.59
Return on Equity25.319.89
Debt Q1 FY16 Q1 FY15
Current Ratio3.014.39
Debt/Capital0.070.05
Interest Expense0.00.0
Interest Coverage0.00.0


Share Data Q1 FY16 Q1 FY15
Shares outstanding (mil)131.48130.72
Div / share0.640.39
EPS2.881.55
Book value / share36.630.37
Institutional Own % n/a n/a
Avg Daily Volume1366624.01176510.0

Valuation


BUY. The current P/E ratio indicates a significant discount compared to an average of 38.46 for the Internet Software & Services industry and a discount compared to the S&P 500 average of 25.03. For additional comparison, its price-to-book ratio of 5.34 indicates a significant premium versus the S&P 500 average of 2.80 and a discount versus the industry average of 5.37. The price-to-sales ratio is well above the S&P 500 average, but well below the industry average. Upon assessment of these and other key valuation criteria, NETEASE INC proves to trade 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 21.25 Peers 38.46   NTES 18.18 Peers 25.70

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 2.38 Peers 20.35   NTES 0.03 Peers 0.25

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 5.34 Peers 5.37   NTES 53.07 Peers 47.28

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 exceeds its peers.

 
Price/Sales
1 2 3 4 5
premium   discount
  Sales Growth
1 2 3 4 5
premium   discount
NTES 6.18 Peers 8.70   NTES 98.18 Peers 25.94

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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