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NetEase (NTES) Stock Sinks As Market Gains: What You Should Know

Zacks Equity Research
·3-min read

In the latest trading session, NetEase (NTES) closed at $350.97, marking a -0.43% move from the previous day. This change lagged the S&P 500's 0.17% gain on the day. At the same time, the Dow 0%, and the tech-heavy Nasdaq gained 0.11%.

Heading into today, shares of the internet technology company had gained 0.85% over the past month, lagging the Computer and Technology sector's gain of 4.62% and the S&P 500's gain of 2.78% in that time.

NTES will be looking to display strength as it nears its next earnings release. The company is expected to report EPS of $3.02, up 13.53% from the prior-year quarter. Our most recent consensus estimate is calling for quarterly revenue of $2.16 billion, down 25.31% from the year-ago period.

Any recent changes to analyst estimates for NTES should also be noted by investors. Recent revisions tend to reflect the latest near-term business trends. As such, positive estimate revisions reflect analyst optimism about the company's business and profitability.

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Our research shows that these estimate changes are directly correlated with near-term stock prices. To benefit from this, we have developed the Zacks Rank, a proprietary model which takes these estimate changes into account and provides an actionable rating system.

The Zacks Rank system, which ranges from #1 (Strong Buy) to #5 (Strong Sell), has an impressive outside-audited track record of outperformance, with #1 stocks generating an average annual return of +25% since 1988. The Zacks Consensus EPS estimate remained stagnant within the past month. NTES is currently sporting a Zacks Rank of #2 (Buy).

Digging into valuation, NTES currently has a Forward P/E ratio of 22.76. This valuation marks a discount compared to its industry's average Forward P/E of 26.21.

We can also see that NTES currently has a PEG ratio of 0.54. This popular metric is similar to the widely-known P/E ratio, with the difference being that the PEG ratio also takes into account the company's expected earnings growth rate. NTES's industry had an average PEG ratio of 5.59 as of yesterday's close.

The Internet - Software and Services industry is part of the Computer and Technology sector. This group has a Zacks Industry Rank of 31, putting it in the top 13% of all 250+ industries.

The Zacks Industry Rank includes is listed in order from best to worst in terms of the average Zacks Rank of the individual companies within each of these sectors. Our research shows that the top 50% rated industries outperform the bottom half by a factor of 2 to 1.

To follow NTES in the coming trading sessions, be sure to utilize Zacks.com.


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Zacks Investment Research