What Can We Learn From NetEase Inc. (NTES)’s Valuation Ratios?

NetEase Inc. (NASDAQ:NTES) finished Wednesday with an addition of $0.87 to close at $95.73, an upside of 0.92 percent. An average of 5,857,020 shares of common stock have been traded in the last five days. There was a gain of $7.02 in the past week. The last 20 days have seen an average of 4,560,710 shares traded, while the 50-day average volume stands at 4,269,648.

NTES stock has increased by 13.26% in the last month. The company shares reached their 1-month lowest point of $78.86 on 09/20/21. With the stock rallying to its 52-week high on 02/11/21, shares of the company touched a low of $77.97 and a high of $134.33 in 52 weeks. In spite of this, the price is down -28.74% from the 52-week high.


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Valuation Metrics

NetEase Inc. (NTES) has a trailing price-to-earnings (P/E) ratio of 35.14, which compares with the 30.20 for the broader industry and 30.41 for the sector. In the last five years, NetEase Inc.’s PE ratio has ranged between 51.01 and 11.48. The stock’s beta is 0.52. Other valuation ratios to consider include the trailing price-to-sales (P/S) ratio at 5.20, the price-to-book (PB) ratio at 4.80, and the price-to-cash flow ratio at 22.08.

NetEase Inc. pays a $0.95 dividend per share annually. It offers a dividend yield of 0.99%. The company has a payout ratio of 62.10%. The company’s most recent quarterly dividend payment took place on Sep. 30, and it was $0.24 a share, representing a up of 75.0 from $0.06 last year. Its latest increase dividend $0.18 reported on Thursday September 2 2021. Dividends have grown by 27.47% each year over the last three years.

NetEase Inc. will next go ex-dividend on 17-Dec. The next dividend payment NetEase Inc. will make is expected to be $0.05.

The quick ratio of NetEase Inc. for the recent quarter was 2.10, and the current ratio was 2.10, indicating that the company is able to meet its debt obligations. Further, the company has a long term debt to equity ratio of 0.00 and a total debt to equity ratio of 0.32 for the recent quarter. On the profitability front, the trailing 12-month gross margin is 52.90% against a 5-year average of 54.5%. NetEase Inc.’s EBITDA margin is 24.43%, while its operating margin for the same period stands at 17.50%. Its gross profit as reported stood at $5.97 billion compared to revenue of $11.29 billion.

For investors, determining the potential profitability of the investment also depends on the performance of the company’s management. In the past 12 months, NetEase Inc.’s return on assets was 8.10%, compared to 15.7% over the last five years. In the past year, the return on investment has been 11.30%, and the 5-year average is 20.8%. Meanwhile, the return on equity (ROE) for the past 12 months has been 14.10% and the 5-year average holds at 26.0%. For the broader industry, ROE averaged 7.41 over the past year.

Technical Picture

From a technical analysis perspective, let’s take a brief look at NetEase Inc. (NTES) price momentum. RSI 9-day as of the close on 13 October was 69.30%, suggesting the stock is Neutral, with historical volatility in this time frame at 52.40%.

As of today, NTES’s price is $95.79 +7.91% or $7.02 from its 5-day moving average. NTES is currently trading +12.68% higher than its 20-day SMA and -18.45% lower than its 100-day SMA. However, the stock’s current price level is +2.87% above the SMA50 and +5.05% above the SMA200.

The stochastic %K and %D were 84.63% and 88.56%, respectively, and the average true range (ATR) was 3.69. With the 14-day stochastic at 85.70% and the average true range at 3.74, the RSI (14) stands at 62.49%. The stock has reached 4.77 on the 9-day MACD Oscillator while the 14-day reading was at 7.39.

Analyst Ratings

The consensus rating for NetEase Inc. (NTES) among analysts is Buy. According to current brokerage recommendations, 0 brokerage firms advise that investors sell NTES, while 2 suggest investors hold. There are 0 analysts who rate the stock as underweight. The stock is rated overweight by 3 analysts, while 29 others rate it as a “buy”.

What is NTES’s price target for the next 12 months?

Analysts predict a range of price targets between $626.93 and $937.16, with a median target of $810.85. Taking a look at these predictions, the average price target given by analysts for NetEase Inc. (NTES) stock is $812.58.

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