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NTES

9/9 Score

NetEase, Inc.

Analysis Date: February 16, 2026

NetEase, Inc. engages in online games, music streaming, online intelligent learning services, and internet content services businesses in China and internationally. The company operates through Games and Related Value-Added Services; Youdao; Cloud Music; and Innovative Businesses and Others segments. It develops and operates PC and mobile games, as well as offers games licensed from other game developers. The company's products and services include Youdao Dictionary, an online knowledge tool; Youdao Translation, a tool specifically designed to support translation needs of business and leisure travelers; U-Dictionary, an online dictionary and translation app; Youdao Kids' Dictionary, a smart and fun tool; smart devices, such as Youdao Dictionary Pen, Youdao Smart Learning Pad, and Youdao Listening Pod; online courses; interactive learning apps; and education digitalization solutions, such as Youdao Smart Learning Terminal, a device that automates paper-based homework processing; Youdao Smart Cloud, a cloud-based platform that allows third-party app developers, smart device brands, and manufacturers to the company's OCR capabilities; and Youdao Sports, a sports-centric educational system. Its products and services include NetEase Cloud Music, a music streaming platform; Yanxuan, an e-commerce platform, which sells private label products; www.163.com portal and related mobile app, Wangyi Xinwen, which deliver information such as news, sports events, technology, fashion trends, and online entertainment; NetEase Mail, an email service; NetEase CC Live streaming, a live streaming platform with a focus on game broadcasting; and NetEase Pay, a payment platform. The company was formerly known as NetEase.com, Inc. and changed its name to NetEase, Inc. in March 2012. NetEase, Inc. was founded in 1997 and is headquartered in Hangzhou, the People's Republic of China.

Buffettology Criteria

All 9 of 9 criteria passed

  • High ROE

    Return on Equity > 12%

    Value: 24.7%

  • High ROIC

    Return on Invested Capital > 9%

    Value: 17.7%

  • Cash Machine

    FCF / Assets > 5%

  • Fair Valuation

    Earnings Yield > 3.5%

    Value: 6.9%

  • Share Buybacks

    Share Count is Dropping

    Value: -1.4%

  • Defensible Moat

    Gross Profit Margin > 40%

    Value: 63.5%

  • Simple Business

    Not in a speculative sector (e.g., Biotech)

    Value: Technology

  • Conservative Debt

    Debt to Equity < 1.5

    Value: 0.05x

  • Consistent Growth

    5-Year Growth is Positive

    Value: 182.4%

Analysis Summary

This NetEase analysis presents a compelling picture, passing all nine of our key checks with flying colors. The company's exceptional ROE and ROIC, coupled with its robust cash generation and strong moat in the technology sector, suggest a business with staying power and pricing power. While the low share buyback percentage is noted, the overwhelmingly positive financial health and consistent growth make this an interesting prospect indeed.

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