Trade-Ideas: NetEase (NTES) Is Today's

Editor's Note: Any reference to TheStreet Ratings and its underlying recommendation does not reflect the opinion of TheStreet, Inc. or any of its contributors including Jim Cramer or Stephanie Link.

Trade-Ideas LLC identified NetEase ( NTES) as a "dead cat bounce" (down big yesterday but up big today) candidate. In addition to specific proprietary factors, Trade-Ideas identified NetEase as such a stock due to the following factors:

  • NTES has an average dollar-volume (as measured by average daily share volume multiplied by share price) of $60.7 million.
  • NTES has traded 1.8 million shares today.
  • NTES is up 3.3% today.
  • NTES was down 6.6% yesterday.

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More details on NTES:

NetEase, Inc., through its subsidiaries, engages in online games, Internet portal, e-mail, and wireless value-added services businesses in China. The company operates through three segments: Online Game Services; Advertising Services; and E-mail, Wireless Value-added Services, and Others. NTES has a PE ratio of 16.2. Currently there are 7 analysts that rate NetEase a buy, no analysts rate it a sell, and 1 rates it a hold.

The average volume for NetEase has been 699,300 shares per day over the past 30 days. NetEase has a market cap of $9.3 billion and is part of the technology sector and internet industry. Shares are up 69.3% year to date as of the close of trading on Friday.

STOCKS TO BUY: TheStreet Quant Ratings has identified a handful of stocks that can potentially TRIPLE in the next 12-months. Learn more.

TheStreetRatings.com Analysis:

TheStreet Quant Ratings rates NetEase as a buy. The company's strengths can be seen in multiple areas, such as its solid stock price performance, growth in earnings per share, increase in net income, revenue growth and largely solid financial position with reasonable debt levels by most measures. Although no company is perfect, currently we do not see any significant weaknesses which are likely to detract from the generally positive outlook.

Highlights from the ratings report include:
  • Powered by its strong earnings growth of 32.69% and other important driving factors, this stock has surged by 33.85% over the past year, outperforming the rise in the S&P 500 Index during the same period. Regarding the stock's future course, although almost any stock can fall in a broad market decline, NTES should continue to move higher despite the fact that it has already enjoyed a very nice gain in the past year.
  • NETEASE INC has improved earnings per share by 32.7% in the most recent quarter compared to the same quarter a year ago. The company has demonstrated a pattern of positive earnings per share growth over the past two years. We feel that this trend should continue. During the past fiscal year, NETEASE INC increased its bottom line by earning $4.44 versus $3.92 in the prior year. This year, the market expects an improvement in earnings ($5.52 versus $4.44).
  • The company, on the basis of net income growth from the same quarter one year ago, has significantly outperformed against the S&P 500 and exceeded that of the Internet Software & Services industry average. The net income increased by 32.2% when compared to the same quarter one year prior, rising from $136.47 million to $180.48 million.
  • Despite its growing revenue, the company underperformed as compared with the industry average of 22.7%. Since the same quarter one year prior, revenues rose by 21.9%. Growth in the company's revenue appears to have helped boost the earnings per share.
  • NTES's debt-to-equity ratio is very low at 0.06 and is currently below that of the industry average, implying that there has been very successful management of debt levels. Along with this, the company maintains a quick ratio of 4.81, which clearly demonstrates the ability to cover short-term cash needs.

STOCKS TO BUY: TheStreet Quant Ratings has identified a handful of stocks that can potentially TRIPLE in the next 12-months. Learn more.
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