Buffett Brain · Research note
Score updated 5 Oct 2026 · analysis from 17 May 2026
NTES· Communication Services
NetEase
NetEase's 64% gross margin and 17% ROIC suggest a strong moat, but management quality and valuation raise questions.
Buffett fit
Partial fit
Owner
76
Durability
91
Management
36
Price
48
Score updated 5 Oct 2026 · analysis from 17 May 2026
Buffett's checklist
Each number against Buffett's bar, and where it ranks among Communication Services stocks in our database.
How much profit the business makes on each dollar invested in it. Higher is better.
What is left of each sale after the cost of making the product. A high number often means pricing power.
The cash the business earns for its owners, compared with the price of the whole company.
How fast sales grew each year over the last five years.
How many years of today's profit you pay for at today's price. Lower means cheaper.
How much the company owes compared with what it owns outright. Lower is safer.
The four pillars
How the business measures up on each of Buffett's four tests.
Owning 100% of NetEase, we'd focus on the robust 17.4% and the strong cash generation, with at $7.1B.
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NetEase has been profitable for the past five years, with no EPS decline, indicating strong durability.
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NetEase's shows promise with a yield of 1.46% and a dividend yield of 2.6%.
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With an yield of 9.81%, NetEase trades near a fair value but not at a bargain.
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For and against
The strongest points on each side, with the numbers behind them.
In its favor
8- 164.29% indicates strong .
- 217.4% suggests efficient capital use.
- 3Net margin of 29.98% reflects high profitability.
- 4/Net Income ratio of 1.43 shows strong cash conversion.
Concerns
8- 1Management quality score of 36 raises governance concerns.
- 2Valuation score of 48 indicates potential overvaluation.
- 3Market cap vs retained earnings of -0.23 suggests inefficiencies.
- 4Interest coverage is 0.0, indicating potential financial risk.
Price history
$117+21.7%· 5-year return
Weekly closing prices. Touch or hover the line for a date.
The business
How the business works
NetEase operates in online games, music streaming, and online education. Its gaming segment is the largest, contributing significantly to the $16.54B revenue. The company boasts a 64.29% , indicative of strong . Its unit economics are favorable with a net margin of 29.98%.
What other investors would say
The same company, judged by three other documented playbooks.
Keep researching
Similar companies in Communication Services
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