NetEase, Inc.

Price story Before the numbers, the tape. A stock price moves through four repeating seasons: a flat base (stage 1), an advance (2), a top (3), a decline (4). Where the price sits in that cycle frames everything below.

NetEase, Inc. trades at $127, in a downtrend and 2 weeks into that stage. That is −0.1% against its own 200-day average. It sits at 42% of a 52-week range of $109 to $153. On relative strength it has been ahead of the S&P 500 on a trailing-13-week view for 4 straight weeks.

Today the stock is in a downtrend — week 2 of stage 4. At $127 it trades −0.1% versus its 200-day average and sits at 42% of its 52-week range ($109–$153).

Against the market, two honest reads. Cumulative: over the last 10.1 years the stock moved +244% while the S&P 500 moved +248% — behind the index over the full window. Recent form: on a trailing-13-week view the stock has been ahead for 4 straight weeks — the ribbon below is that same metric, week by week.

What would end the trend, mechanically: two Friday closes in a row below the 200-day line. That is the exit rule — no debates.

→ The trend is one thing; the bill is another. Are you paying up for it? Next: how the P/E reads against its own history.

Valuation P/E is the price of $1 of annual profit: how many dollars the market pays for each dollar the company earns in a year.

NetEase, Inc. trades at 16.5× P/E, against too little history to rank. This places the multiple against the stock’s own record, and says nothing about what the business is worth.

Today's P/E of 16.5× is against too little history to rank. This is a comparison against the stock's own history — not a claim about what it is worth.

Why the multiple sits where it does: over the past year annual EPS moved +14.0% against a −6.0% price move — earnings outran the price, pushing the multiple DOWN its own range.

The price move, decomposed: over 3y, of the +5.5%/yr price move, ~+10.5%/yr came from earnings growth and ~−5.0 pp from the multiple (compressing). The split is the honest approximate (price return minus earnings growth); it makes the rally itself visible instead of hiding it behind the percentile.

Put together: the multiple is unremarkable against its own past, so the story rests on the earnings line underneath it, not the multiple.

→ Cheap or dear rides on the earnings. Are they actually growing? Next: the fundamental stage — where the business sits in its arc, and how growth has compounded.

Stage: Topping out Every business sits somewhere on a fundamental arc, and this page names the spot before anything else. The last twelve quarters of revenue, profit and EPS growth — plus the return the business earns on its capital — are read as curves: Deteriorating (the curves are falling), Turning around (a trough has just formed and the last few quarters lift off it), Improving (the climb off the trough is sustained), Consistent (steadily positive with healthy returns), Topping out (still high but decelerating from the peak). When the curves genuinely disagree the read is Mixed; too little history is No read. CAGR (compound annual growth rate) is the smooth yearly pace that turns the starting value into the latest one — the fairest way to compare growth across different time spans. Read the columns together: if the 1-year number towers over the 10-year, recent growth is running hotter than the long-run trend. A dash means that window is not held, or the base year was a loss (where a growth rate is not meaningful).

NetEase, Inc. reads as topping out on its fundamental arc. Topping out — profit and EPS growth have decelerated hard (profit growth +37.5% at its peak → +6.3% latest) while ROCE still reads 23.4%. The read is built from 12 quarters across 4 curves, on full evidence.

Why it matters: decelerating from a peak is where good stories quietly end — the multiple usually notices late.

→ The stage names the trajectory. Next: the revenue line that produces it, quarter by quarter.

4-Factor Sector Score

No sector-relative score — NetEase, Inc. is not among the largest members shown in this industry comparison for Electronic Gaming & Multimedia.

The score is a rank WITHIN a peer set: every metric is scored by percentile against the other members. Without the peer set there is no score to state, so none is invented here.

Revenue Revenue is the top line: everything the company billed its customers in the period.

NetEase, Inc. reported $30.6 B of revenue in the Mar 26 quarter, +6.1% year on year. That is the 5th straight quarter of year-on-year growth. Over 4 years it has compounded at 6.5% a year. The last full year, FY25, came in at $113 B. The last four reported quarters add to $114 B.

NetEase, Inc. reported $30.6 B of revenue in the Mar 26 quarter, +6.1% year on year. That is the 5th straight quarter of year-on-year growth. Over 4 years it has compounded at 6.5% a year. The last full year, FY25, came in at $113 B. The last four reported quarters add to $114 B.

FY25 revenue came in at $113 B (+7.0% on the year), capping 4 years at 6.5% compound. The latest quarter (Mar 26) printed $30.6 B, +6.1% year on year — the 5th consecutive quarter of year-over-year growth.

Pace check: the last four quarters averaged +6.7% growth against the decade's 6.5% — the current year is running in line with its own long-run rate.

Acceleration check: trailing-twelve-month revenue grew +6.6% over the last 4 quarters against +4.2%/yr over the last 8 — stabilising; TTM profit +6.3% vs +7.4%/yr — stabilising.

→ Revenue grew — did margins hold as it scaled? Next: 41.4% this quarter (+5.2 pp YoY).

Operating margin Operating margin is what is left of every $100 of sales after running the business, before interest and tax. It is the cleanest read on pricing power and cost control.

NetEase, Inc.'s operating margin is 41.4% in the Mar 26 quarter, +5.2 percentage points against the same quarter a year ago. That is the widest this company has ever printed on a full-year basis. Across 5 fiscal years the operating margin has ranged 18.7% to 31.8%. The current quarter is running above every full year in that window.

NetEase, Inc.'s operating margin is 41.4% in the Mar 26 quarter, +5.2 percentage points against the same quarter a year ago. That is the widest this company has ever printed on a full-year basis. Across 5 fiscal years the operating margin has ranged 18.7% to 31.8%. The current quarter is running above every full year in that window.

The latest quarter's operating margin is 41.4%, +5.2 pp against the same quarter a year ago. Across 5 fiscal years the operating margin has ranged 18.7%–31.8%, and FY25's 31.8% is the top of that band — a record year.

Why the margin moved: operating margin went +5.2 pp year on year while gross margin went +5.3 pp — the gain came mostly from the gross line: input costs and pricing.

Worth repeating from the valuation section: cheap against its own history on record margins is not the same thing as cheap — a record margin flatters every ratio built on top of it.

→ Margins held — did that reach the bottom line? Next: profit +2.8% in the latest quarter.

Net profit Net profit is what survives every cost, interest and tax — the number EPS, dividends and book value all grow from.

NetEase, Inc. earned $10.8 B of net profit in the Mar 26 quarter, +2.8% year on year. Full-year FY25 profit was $34.8 B. The 4-year compound rate is 19.6%. That is 35.5% of the quarter's revenue. The same quarter a year earlier earned $10.6 B.

NetEase, Inc. earned $10.8 B of net profit in the Mar 26 quarter, +2.8% year on year. Full-year FY25 profit was $34.8 B. The 4-year compound rate is 19.6%. That is 35.5% of the quarter's revenue. The same quarter a year earlier earned $10.6 B.

Mar 26 profit was $10.8 B, +2.8% year on year. On the full year, FY25 printed $34.8 B (+15.0%), and the 4-year compound rate is 19.6%.

Why profit moved: revenue contributed +6.1% and the margin +5.2 pp — the quarter was margin-led: most of the profit growth came from keeping more of each sale.

Pace comparison, last four quarters: profit +9.6% vs revenue +6.7%. Profit and revenue are moving roughly in step.

→ Profit rose — but did the cash follow? Next: 133% of the last 3 years' profit arrived as cash.

Cash flow — the router The P&L says what was earned; the cash-flow statement says what actually arrived. Operating cash flow (CFO) against profit is the cleanest lie detector in the accounts.

Over the last 3 fiscal years 133% of NetEase, Inc.'s reported profit arrived as operating cash — the cash follows the profit. In FY25 that was $50.7 B of operating cash against $34.8 B of profit. After $1.1 B of capital spending, $49.7 B was left as free cash.

FY25: operating cash of $50.7 B against reported profit of $34.8 B, leaving free cash of $49.7 B after $1.1 B of capital spending. Across the last 3 fiscal years the conversion rate is 133% of profit.

Cash-flow readings here are annual — that is the resolution our series carries, so this section moves once a year.

Why: conversion is measured cleanly, but the working-capital day-counts behind it sit below what we hold — the move is shown without inventing its driver.

Router verdict: the visible cash user is investment — the next section checks what the spending is buying.

→ So follow the cash to where it goes. Next: $5.0 B of building over 3 years.

Where the cash goes Working capital is the cash tied up between paying suppliers and getting paid: debtor days (customers owe), inventory days (stock waits), and the cash conversion cycle (the whole loop, in days of sales).

NetEase, Inc. does not report the debtor, inventory and payable day-counts a cash cycle is built from, so this section reads the investment side instead. Capital spending ran $5.0 B over the last 3 years. Averaged over those years that is 1.5% of FY25 revenue a year.

Working-capital day-counts are not in our numbers for this stock, so this section reads the investment side — where the cash is being put to work.

On the investment side: capital spending of $5.0 B over the last 3 fiscal years.

The synthesis: the cash is going into capacity, not disappearing into the cycle — the question becomes whether the new capacity earns.

→ Does all this activity actually earn its cost of capital? Next: ROE is 22% and the ROIC − WACC spread is +368.0 pp.

Return on equity Return on equity (ROE) is the profit the business earns on its shareholders’ money. With the full capital-employed split not in our numbers, ROE is the cleanest long ladder we can draw here.

NetEase, Inc. earns a ROE of 21% in FY25. That is up from a trough of 17% in FY21. Return on invested capital clears the cost of that capital by +368.0 percentage points, so growth here adds value rather than only size. The wiring behind it is 30.9% net margin on 0.51× asset turns.

FY25 ROE is 21%, recovered from a FY21 trough of 17% — the full ladder below shows the fall and the climb, undoctored.

Why the return is what it is — the wiring (FY25): 30.9% net margin × 0.51× asset turns × 1.34× balance-sheet leverage ≈ 21.1% on equity. Margin is doing the heavy lifting; leverage is modest — this is an earned return, not a borrowed one.

The capstone test — ROIC − WACC: 376.5% − 8.5% = a +368.0 pp spread. The 8.5% is an estimate of this company's own cost of capital — read the sign and the size of the spread, not the decimals. A spread this wide means every dollar reinvested creates more than a dollar of value — the engine compounds.

→ Returns like these — is the balance sheet borrowing to make them? Next: debt-to-equity is 0.06.

Dividend A dividend is cash paid out per share. Dividend per share is the declared amount for the period; the trailing twelve-month total is the four most recent quarters added together.

NetEase, Inc. paid $4.20 per share over the last four reported quarters, up 1.4% on a year ago. The most recent declaration was $0.99 for Mar 26. Against the current price of $127 that is a trailing yield of 3.30%, measured on dividends already paid rather than on a forecast.

NetEase, Inc. paid $4.20 per share over the last four reported quarters, up 1.4% on a year ago. The most recent declaration was $0.99 for Mar 26. Against the current price of $127 that is a trailing yield of 3.30%, measured on dividends already paid rather than on a forecast.

NetEase, Inc. paid $4.20 per share across the last four reported quarters, most recently $0.99 for Mar 26. That is up 1.4% against the same quarter a year earlier. Against the current price of $127 the trailing twelve months work out to 3.30% — trailing dividends measured against today's price, not a forward estimate.

→ A payout is cash leaving the business. Next: what the balance sheet looks like behind it.

Debt Debt-to-equity says how much of the business is funded by borrowings. Low is the safe corner; the trend matters as much as the level.

NetEase, Inc. carries total debt of $11.0 B against shareholder equity of $169 B as of Mar 26, a debt-to-equity of 0.06 — effectively unlevered. On the annual view that ratio went from 0.22 in FY21 to 0.04 in FY25. The returns elsewhere on this page are therefore earned rather than borrowed.

Mar 26: total debt of $11.0 B against shareholder equity of $169 B — a debt-to-equity of 0.06. On the annual view, debt-to-equity went from 0.22 (FY21) to 0.04 (FY25). The returns on this page are earned, not borrowed.

→ Who owns this, and are they adding or leaving? Next: the register.

Ownership There is no quarter-by-quarter holder register to read here, so we read the crowd through short interest — the slice of tradable shares currently sold short, positioned for a fall.

No ownership or positioning reading is held for NetEase, Inc., so this section names the gap rather than filling it. At typical trading volumes those positions would take about 2.4 days to buy back. There is no quarter-by-quarter holder register to read for this filer, so the crowd is read through short interest instead.

We hold no ownership or positioning reading for this stock, so this section says that plainly.

→ One last check: does the safety math agree? Next: the balance-sheet safety line.

Safety line The Z-score estimates how far a company sits from balance-sheet distress — above roughly 3 is safe, below roughly 1.8 is the danger zone. It was built for manufacturers, so it is not applied to banks and lenders.

NetEase, Inc.: the Z-score is not available for this stock, so we say so rather than invent one. It is a distance-to-distress estimate from the balance sheet, not a forecast of failure. The debt, cash-flow and return sections above carry the balance-sheet evidence this page does hold, and each of them states its own reporting date.

The safety line in one sentence: the Z-score is not available for this stock, so we say so rather than invent one.

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