Why NetEase Is On Our Buy List: NetEase Stock Analysis

 

  • NetEase revenue growth has rebounded significantly in 2014.
  • NetEase has robust profit margins and healthy cash flows.
  • With its PE ratio significantly lower than the industry PE, NetEase is attractive.

Why NetEase Is On Our Buy List : Video Transcript

Hello and welcome to this videograph about NetEase (NASDAQ:NTES).

NetEase has seen growth rebound in 2014, with a significant improvement in growth rates, after growing at a relatively slower pace for a couple of years. In spite of the marginal decline in operating and net margins in 2014, profit margins are robust, with net margins coming in at 41% for the year.

NetEase has healthy cash flows, with operating cash flows at 1.2 times net income, and a free cash flow margin of 111%. The NetEase price to earnings ratio of 17.8 is attractive when compared to the industry average of 33.8. That said, given that its price to sales multiple of 7.3 is higher than the industry average, conservative investors would do well to buy this stock on dips.

See our NetEase stock analysis video for a quick roundup of key fundamentals, like daily updated valuations and long term trends from the company's financials.

NetEase is part of our recently updated list of stocks to buy. If you're interested in Chinese internet stocks, you can also check out our latest videos on why Qihoo makes it to our buy listVipshop's stellar 5000% post IPO return, Baidu's 2015 upside potential and the best Chinese internet stocks in 2014.

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Neither Amigobulls, nor any members of its staff hold positions in any of the stocks discussed in this post. The author may not be a certified/registered investment advisor, and the opinions expressed should not be treated as investment advice. Buying and selling of securities carries the risk of monetary losses. Readers/Viewers are advised to carry out their own due diligence and consult their investment advisors before making any investment decisions. Neither Amigobulls, nor the author have any business relationship with any of the companies covered in this post.

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