Now trading at a price of $82.42, NetEase has moved 3.4% so far today.
NetEase returned losses of -18.3% last year, with its stock price reaching a high of $118.9 and a low of $75.85. Over the same period, the stock underperformed the S&P 500 index by -57.4%. AThe company's 50-day average price was $85.62. NetEase, Inc. engages in online games, music streaming, online intelligent learning services, and internet content services businesses in China and internationally. Based in Hangzhou, China, the Large-Cap Technology company has 29,128 full time employees. NetEase has offered a 22.3% dividend yield over the last 12 months.
Exceptional EPS Growth but Similar Gross Margins to the Industry Average of 62.85%:
| 2018 | 2019 | 2020 | 2021 | 2022 | 2023 | |
|---|---|---|---|---|---|---|
| Revenue (M) | $9,768 | $8,509 | $11,290 | $13,747 | $13,991 | $14,573 |
| Gross Margins | 42% | 53% | 53% | 54% | 55% | 61% |
| Net Margins | 10% | 36% | 17% | 19% | 21% | 28% |
| Net Income (M) | $942 | $3,078 | $1,890 | $2,664 | $2,877 | $4,135 |
| Net Interest Expense (M) | $87 | $63 | $113 | $111 | $123 | $148 |
| Depreciation & Amort. (M) | $303 | $375 | $530 | $514 | $414 | $430 |
| Diluted Shares (M) | 3,255 | 3,250 | 3,350 | 3,367 | 3,296 | 3,252 |
| Earnings Per Share | $0.27 | $0.94 | $2.75 | $0.79 | $0.89 | $1.27 |
| EPS Growth | n/a | 248.15% | 192.55% | -71.27% | 12.66% | 42.7% |
| Avg. Price | $47.05 | $48.95 | $78.16 | $101.44 | $92.85 | $82.42 |
| P/E Ratio | 168.04 | 51.53 | 27.91 | 126.8 | 103.17 | 63.89 |
| Free Cash Flow (M) | $1,584 | $2,299 | $3,653 | $3,660 | $3,713 | $4,652 |
| CAPEX (M) | $368 | $174 | $162 | $251 | $305 | $324 |
| Current Ratio | 1.96 | 2.23 | 2.31 | 2.24 | 2.32 | 2.65 |
NetEase has exceptional EPS growth and generally positive cash flows. Additionally, the company's financial statements display an excellent current ratio of 2.65 and growing revenues and a flat capital expenditure trend. Furthermore, NetEase has similar gross margins to its peers.
an Exceptionally Low P/B Ratio but Priced Beyond Its Margin of Safety:
NetEase has a trailing twelve month P/E ratio of 13.7, compared to an average of 30.01 for the Technology sector. Based on its EPS guidance of $7.74, the company has a forward P/E ratio of 11.1. According to the 61.5% compound average growth rate of NetEase's historical and projected earnings per share, the company's PEG ratio is 0.22. Taking the weighted average of the company's EPS CAGR and the broader market's 5-year projected EPS growth rate, we obtain a normalized growth rate of 23.3%. On this basis, the company's PEG ratio is 0.59. This suggests that its shares are undervalued. Additionally, the market is possibly undervaluing NetEase in terms of its equity because its P/B ratio is 0.41 whereas the sector average is 3.91. The company's shares are currently trading 564.7% below their Graham number.
NetEase Has an Analyst Consensus of Strong Upside Potential:
The 30 analysts following NetEase have set target prices ranging from $82.19 to $156.99 per share, for an average of $115.95 with a buy rating. The company is trading -28.9% away from its average target price, indicating that there is an analyst consensus of strong upside potential.
NetEase has a very low short interest because 1.1% of the company's shares are sold short. Institutions own 11.9% of the company's shares, and the insider ownership rate stands at 1.38%, suggesting a large amount of insider shareholders. The largest shareholder is Ninety One UK Ltd, whose 1% stake in the company is worth $529,864,816.
