NTESNetEase, Inc.
Is the business good?
The checks split: earnings fully cash-backed (1.7×) and elite returns on assets, but margins compressing.
Operating profit is fully backed by cash.
Positive operating leverage, operating profit is growing faster than sales, so margins widen as the business scales.
High-quality, exceptional returns on the assets themselves, not leverage. ROE 22% = margin × turnover × leverage.
Unless marked, from derived.
Where this answer is blind. The F-score rewards improvement, so an already-elite company can score mid-pack.
How good a business is NTES?
NetEase, Inc. earns 31% on the capital it employs against a 9.0% cost of capital, so the business is worth more the bigger it gets.
Return on invested capital · cost of capital 9.0% · 22 points above what the capital costs: growth creates value
- Operating margin
- 32%
Operating margin · Electronic Gaming & Multimedia median −2.9% · fiscal year to FY2025
- Cash conversion
- 1.66×
Cash conversion · 1.58× a year ago · operating cash flow covers the operating profit after tax
- Share count, year on year
- −0.38%
Share count, year on year · flat: no meaningful dilution
| Year | Operating margin |
|---|---|
| FY2020 | 20% |
| FY2021 | 19% |
| FY2022 | 20% |
| FY2023 | 27% |
| FY2024 | 28% |
| FY2025 | 32% |
Details›
- Gross marginfiscal year to FY2025
- 64%
- Operating marginfiscal year to FY2025
- 32%
- Net marginfiscal year to FY2025
- 31%
- Free cash flow margin
- 44%
- R&D as % of revenue
- 16%
- Revenue, trailing twelve months
- $112.6B
- Free cash flow, trailing twelve months
- $49.7B
- Net income, trailing twelve months
- $34.8B
- Return on invested capitaloperating profit after tax ÷ debt + equity − cash
- 31%
Margins, capital and share counts from the statements as filed with the SEC; cash conversion is operating cash flow over operating profit after tax.
Communication Services
Ranks #2 of 124 by RyuScore