Analyzing NetEase (NTES) & The Competition

NetEase (NASDAQ: NTES) is one of 178 publicly-traded companies in the “IT Services & Consulting” industry, but how does it compare to its rivals? We will compare NetEase to related companies based on the strength of its analyst recommendations, risk, earnings, valuation, profitability, institutional ownership and dividends.

Volatility & Risk

NetEase has a beta of 0.93, indicating that its stock price is 7% less volatile than the S&P 500. Comparatively, NetEase’s rivals have a beta of 1.14, indicating that their average stock price is 14% more volatile than the S&P 500.

Earnings & Valuation

This table compares NetEase and its rivals gross revenue, earnings per share and valuation.

	Gross Revenue	Net Income	Price/Earnings Ratio
NetEase	$5.50 billion	$1.67 billion	24.63
NetEase Competitors	$2.79 billion	$290.02 million	346.84

NetEase has higher revenue and earnings than its rivals. NetEase is trading at a lower price-to-earnings ratio than its rivals, indicating that it is currently more affordable than other companies in its industry.

Analyst Ratings

This is a breakdown of current ratings and price targets for NetEase and its rivals, as provided by MarketBeat.com.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
NetEase	3	4	7	0	2.29
NetEase Competitors	740	4634	7349	161	2.54

NetEase presently has a consensus price target of $322.77, suggesting a potential downside of 9.44%. As a group, “IT Services & Consulting” companies have a potential downside of 6.82%. Given NetEase’s rivals stronger consensus rating and higher possible upside, analysts plainly believe NetEase has less favorable growth aspects than its rivals.

Profitability

This table compares NetEase and its rivals’ net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
NetEase	25.34%	31.84%	21.48%
NetEase Competitors	-21.35%	-282.88%	-4.87%

Dividends

NetEase pays an annual dividend of $3.63 per share and has a dividend yield of 1.0%. NetEase pays out 25.1% of its earnings in the form of a dividend. As a group, “IT Services & Consulting” companies pay a dividend yield of 1.6% and pay out 38.0% of their earnings in the form of a dividend.

Institutional & Insider Ownership

50.5% of NetEase shares are held by institutional investors. Comparatively, 61.5% of shares of all “IT Services & Consulting” companies are held by institutional investors. 54.7% of NetEase shares are held by company insiders. Comparatively, 17.0% of shares of all “IT Services & Consulting” companies are held by company insiders. Strong institutional ownership is an indication that endowments, large money managers and hedge funds believe a stock will outperform the market over the long term.

Summary

NetEase rivals beat NetEase on 8 of the 15 factors compared.

About NetEase

NetEase, Inc. (NetEase) is a technology company. The Company operates an interactive online community in China and is a provider of Chinese language content and services through its online games, Internet media, e-mail, e-commerce and other businesses. The Company operates through three segments: Online Game Services; Advertising Services, and E-mail, E-commerce and Others. Its online games business primarily focuses on offering personal computer (PC)-client massively multi-player online role-playing games (PC-client MMORPGs), as well as mobile games to the Chinese market. The NetEase Websites provide Internet users with Chinese language online services centered over three core service categories, which include content, community and communication. Its online advertising offerings include banner advertising, direct e-mail, sponsored special events, games, contests and other activities. It offers free and fee-based premium e-mail services to its individual users and corporate users.

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