Head-To-Head Analysis: NetEase (NTES) & The Competition

NetEase (NASDAQ:NTES) is one of 184 public companies in the “Entertainment” industry, but how does it compare to its peers? We will compare NetEase to similar companies based on the strength of its institutional ownership, valuation, profitability, analyst recommendations, risk, dividends and earnings.

Insider and Institutional Ownership

11.1% of NetEase shares are held by institutional investors. Comparatively, 36.3% of shares of all “Entertainment” companies are held by institutional investors. 54.7% of NetEase shares are held by insiders. Comparatively, 23.9% of shares of all “Entertainment” companies are held 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.

Dividends

NetEase pays an annual dividend of $1.91 per share and has a dividend yield of 1.7%. NetEase pays out 26.3% of its earnings in the form of a dividend. As a group, “Entertainment” companies pay a dividend yield of 16.7% and pay out 79.9% of their earnings in the form of a dividend.

Valuation & Earnings

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

	Gross Revenue	Net Income	Price/Earnings Ratio
NetEase	$116.60 billion	$4.83 billion	15.65
NetEase Competitors	$6.10 billion	$73.91 million	14.38

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

Volatility and Risk

NetEase has a beta of 0.68, meaning that its stock price is 32% less volatile than the S&P 500. Comparatively, NetEase’s peers have a beta of 0.96, meaning that their average stock price is 4% less volatile than the S&P 500.

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	27.86%	19.50%	14.45%
NetEase Competitors	10.24%	-21.31%	-2.54%

Analyst Ratings

This is a summary of recent ratings and price targets for NetEase and its peers, as provided by MarketBeat.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
NetEase	1	2	6	0	2.56
NetEase Competitors	1870	4492	9601	255	2.51

NetEase currently has a consensus price target of $159.86, indicating a potential upside of 40.67%. As a group, “Entertainment” companies have a potential upside of 20.99%. Given NetEase’s stronger consensus rating and higher probable upside, analysts plainly believe NetEase is more favorable than its peers.

Summary

NetEase beats its peers on 11 of the 15 factors compared.

NetEase Company Profile

NetEase, Inc. engages in online games, music streaming, online intelligent learning services, and internet content services businesses in China and internationally . The company operates through Games and Related Value-Added Services, Youdao, Cloud Music, and Innovative Businesses and Others segments. It develops and operates PC and mobile games, as well as offers games licensed from other game developers. The company's products and services include Youdao Dictionary, an online knowledge tool; Youdao Translation, a tool specifically designed to support translation needs of business and leisure travelers; U-Dictionary, an online dictionary and translation app; Youdao Kids' Dictionary, a smart and fun tool; smart devices, such as Youdao Dictionary Pen, Youdao Smart Learning Pad, Youdao Listening Pod, Youdao Smart Light, Youdao Pocket Translator, and Youdao Super Dictionary; online courses; interactive learning apps; and education digitalization solutions, such as Youdao Smart Learning Terminal, a device that automates paper-based homework processing; Youdao Smart Cloud, a cloud-based platform that allows third-party app developers, smart device brands, and manufacturers to the company's OCR capabilities; and Youdao Sports, a sports-centric educational system. Its products and services also include NetEase Cloud Music, a music streaming platform; Yanxuan, an e-commerce platform, which sells private label products; www.163.com portal and related mobile app, Wangyi Xinwen, which deliver information such as news, sports events, technology, fashion trends, and online entertainment; NetEase Mail, an email service; NetEase CC Live streaming, a live streaming platform with a focus on game broadcasting; and NetEase Pay, a payment platform. The company was formerly known as NetEase.com, Inc. and changed its name to NetEase, Inc. in March 2012. NetEase, Inc. was founded in 1997 and is headquartered in Hangzhou, the People's Republic of China.