NetEase (NTES) & Its Competitors Financial Analysis

NetEase (NASDAQ: NTES) is one of 177 public companies in the “IT Services & Consulting” industry, but how does it compare to its rivals? We will compare NetEase to similar businesses based on the strength of its analyst recommendations, earnings, valuation, institutional ownership, profitability, risk and dividends.

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	-22.01%	-262.13%	-3.74%

Risk and Volatility

NetEase has a beta of 0.95, meaning that its share price is 5% less volatile than the S&P 500. Comparatively, NetEase’s rivals have a beta of 1.14, meaning that their average share price is 14% more volatile than the S&P 500.

Institutional and Insider Ownership

50.4% of NetEase shares are owned by institutional investors. Comparatively, 61.4% of shares of all “IT Services & Consulting” companies are owned by institutional investors. 54.7% of NetEase shares are owned by insiders. Comparatively, 17.0% of shares of all “IT Services & Consulting” companies are owned by insiders. Strong institutional ownership is an indication that large money managers, endowments and hedge funds believe a company will outperform the market over the long term.

Analyst Recommendations

This is a summary of current ratings for NetEase and its rivals, as reported by MarketBeat.com.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
NetEase	3	4	7	0	2.29
NetEase Competitors	749	4581	7323	164	2.54

NetEase presently has a consensus price target of $322.77, indicating a potential downside of 6.46%. As a group, “IT Services & Consulting” companies have a potential downside of 11.49%. Given NetEase’s higher possible upside, research analysts clearly believe NetEase is more favorable than its rivals.

Dividends

NetEase pays an annual dividend of $3.63 per share and has a dividend yield of 1.1%. NetEase pays out 24.0% 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 36.1% of their earnings in the form of a dividend.

Valuation and Earnings

This table compares NetEase and its rivals top-line revenue, earnings per share (EPS) and valuation.

	Gross Revenue	Net Income	Price/Earnings Ratio
NetEase	$5.50 billion	$1.67 billion	22.81
NetEase Competitors	$2.79 billion	$288.44 million	319.68

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.

Summary

NetEase beats its rivals on 8 of the 15 factors compared.

NetEase Company Profile

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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