Based on the aggregated intelligence of 170,000-plus investors participating in Motley Fool CAPS, the Fool's free investing community, Chinese Internet gaming specialist NetEase.com (Nasdaq: NTES ) has earned a respected four-star ranking.
With that in mind, let's take a closer look at NetEase's business and see what CAPS investors are saying about the stock right now.
NetEase facts
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Headquarters (Founded)
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Beijing, China (1997)
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Market Cap
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$5.7 billion
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Industry
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Internet software and services
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Trailing-12-Month Revenue
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$780.95 million
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Management
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Founder/CEO William Lei Ding
Acting CFO Onward Choi
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Return on Equity (Average, Past 3 Years)
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30.8%
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Cash/Debt
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$1.34 billion / $0
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Competitors
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Shanda Interactive (Nasdaq: SNDA )
Sina (Nasdaq: SINA )
Sohu.com (Nasdaq: SOHU )
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Sources: Capital IQ (a division of Standard & Poor's) and Motley Fool CAPS.
On CAPS, 97% of the 1,104 members who have rated NetEase believe the stock will outperform the S&P 500 going forward. These bulls include JPNot and oldmanarchitect.
Late last year, JPNot listed several of NetEase's positives:
Getting rights to [World of Warcraft] in China is huge. Good fundamentals as well. High ROE. Low PEG. Tons of cash and no debt.
Additionally, NetEase boasts a robust three-year average operating margin of 54.9%. That easily tops that of listed rivals Shanda (34.6%), Sina (18.1%), and Sohu (37.5%), as well as other gaming plays like Activision Blizzard (Nasdaq: ATVI ) (9.7%) and Electronic Arts (Nasdaq: ERTS ) , which weighs in with a negative average operating margin.
CAPS member oldmanarchitect elaborates on the bull case:
Talked myself into this one. Gaming is addictive and the demographics in China lead me to believe it can be a huge part of daily life in China. There is little doubt that the future of gaming is network based. The US market is still growing -- if China sees a small percentage of that, this stock is well positioned to capitalize.
What do you think about NetEase, or any other stock for that matter? If you want to retire rich, you need to put together the best portfolio you can. Owning exceptional stocks is a surefire way to secure your financial future, and on Motley Fool CAPS, thousands of investors are working every day to find them. CAPS is 100% free, so get started!
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