The 10-second takeaway
For the quarter ended March 31 (Q1), NetEase beat expectations on revenues and beat expectations on earnings per share.
Compared to the prior-year quarter, revenue grew significantly and GAAP earnings per share improved significantly.
Gross margins expanded, operating margins improved, net margins shrank.
NetEase chalked up revenue of $318.2 million. The 14 analysts polled by S&P Capital IQ expected to see a top line of $310.8 million on the same basis. GAAP reported sales were 36% higher than the prior-year quarter's $229.1 million.
Source: S&P Capital IQ. Quarterly periods. Dollar amounts in millions. Non-GAAP figures may vary to maintain comparability with estimates.
EPS came in at $1.14. The nine earnings estimates compiled by S&P Capital IQ anticipated $1.02 per share. GAAP EPS of $1.14 for Q1 were 33% higher than the prior-year quarter's $0.86 per share.
Source: S&P Capital IQ. Quarterly periods. Non-GAAP figures may vary to maintain comparability with estimates.
For the quarter, gross margin was 67.7%, 200 basis points better than the prior-year quarter. Operating margin was 49.6%, 340 basis points better than the prior-year quarter. Net margin was 47.9%, 130 basis points worse than the prior-year quarter.
Next quarter's average estimate for revenue is $334.6 million. On the bottom line, the average EPS estimate is $1.09.
Next year's average estimate for revenue is $1.39 billion. The average EPS estimate is $4.66.
The stock has a three-star rating (out of five) at Motley Fool CAPS, with 1,125 members rating the stock outperform and 41 members rating it underperform. Among 315 CAPS All-Star picks (recommendations by the highest-ranked CAPS members), 301 give NetEase a green thumbs-up, and 14 give it a red thumbs-down.
Of Wall Street recommendations tracked by S&P Capital IQ, the average opinion on NetEase is outperform, with an average price target of $61.52.
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Seth Jayson had no position in any company mentioned here at the time of publication. You can view his stock holdings here. He is co-advisor of Motley Fool Hidden Gems, which provides new small-cap ideas every month, backed by a real-money portfolio. Motley Fool newsletter services have recommended buying shares of NetEase. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.