NetEase (NTES) versus Its Peers Critical Survey

NetEase (NASDAQ: NTES) is one of 181 public 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 profitability, risk, dividends, earnings, valuation, analyst recommendations and institutional ownership.

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	-20.06%	-256.17%	-3.50%

Insider and Institutional Ownership

50.5% of NetEase shares are owned by institutional investors. Comparatively, 62.0% of shares of all “IT Services & Consulting” companies are owned by institutional investors. 54.7% of NetEase shares are owned by company insiders. Comparatively, 16.6% of shares of all “IT Services & Consulting” companies are owned by company insiders. Strong institutional ownership is an indication that hedge funds, endowments and large money managers believe a stock is poised for long-term growth.

Analyst Ratings

This is a breakdown of recent recommendations and price targets for NetEase and its rivals, as reported by MarketBeat.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
NetEase	3	4	7	0	2.29
NetEase Competitors	745	4671	7387	167	2.54

NetEase currently has a consensus target price of $322.77, indicating a potential downside of 11.18%. As a group, “IT Services & Consulting” companies have a potential downside of 7.79%. Given NetEase’s rivals stronger consensus rating and higher possible upside, analysts plainly believe NetEase has less favorable growth aspects than its rivals.

Valuation and Earnings

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

	Gross Revenue	Net Income	Price/Earnings Ratio
NetEase	$5.50 billion	$1.67 billion	25.11
NetEase Competitors	$2.79 billion	$290.02 million	310.87

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.

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 1.5% and pay out 38.0% of their earnings in the form of a dividend.

Risk and Volatility

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

Summary

NetEase rivals beat NetEase 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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