Comparing NetEase (NTES) and Its Peers

NetEase (NASDAQ: NTES) is one of 186 publicly-traded companies in the “IT Services & Consulting” industry, but how does it contrast to its peers? We will compare NetEase to similar companies based on the strength of its earnings, valuation, institutional ownership, risk, analyst recommendations, profitability and dividends.

Profitability

This table compares NetEase and its peers’ 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 -20.48% -271.05% -4.70%

Dividends

NetEase pays an annual dividend of $3.63 per share and has a dividend yield of 1.1%. 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 37.7% of their earnings in the form of a dividend.

Analyst Ratings

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

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
NetEase 3 4 8 0 2.33
NetEase Competitors 731 4655 7438 164 2.54

NetEase presently has a consensus price target of $322.77, suggesting a potential upside of 1.41%. As a group, “IT Services & Consulting” companies have a potential upside of 4.22%. Given NetEase’s peers stronger consensus rating and higher possible upside, analysts plainly believe NetEase has less favorable growth aspects than its peers.

Earnings & Valuation

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

Gross Revenue Net Income Price/Earnings Ratio
NetEase $5.50 billion $1.67 billion 22.00
NetEase Competitors $2.79 billion $289.83 million 338.15

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

Institutional and Insider Ownership

50.5% of NetEase shares are owned by institutional investors. Comparatively, 63.0% of shares of all “IT Services & Consulting” companies are owned by institutional investors. 54.7% of NetEase shares are owned by insiders. Comparatively, 16.5% of shares of all “IT Services & Consulting” companies are owned by insiders. Strong institutional ownership is an indication that hedge funds, endowments and large money managers believe a stock will outperform the market over the long term.

Risk & Volatility

NetEase has a beta of 0.93, suggesting that its share price is 7% less volatile than the S&P 500. Comparatively, NetEase’s peers have a beta of 1.13, suggesting that their average share price is 13% more volatile than the S&P 500.

Summary

NetEase peers 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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