Analyzing NetEase (NASDAQ:NTES) and Walt Disney (NYSE:DIS)

NetEase (NASDAQ:NTES) and Walt Disney (NYSE:DIS) are both large-cap communication services companies, but which is the superior stock? We will contrast the two businesses based on the strength of their analyst recommendations, earnings, institutional ownership, risk, valuation, dividends and profitability.

Profitability

This table compares NetEase and Walt Disney’s net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
NetEase	27.86%	19.50%	14.45%
Walt Disney	8.70%	9.90%	5.63%

Analyst Recommendations

This is a summary of current ratings and recommmendations for NetEase and Walt Disney, as reported by MarketBeat.com.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
NetEase	0	3	7	0	2.70
Walt Disney	1	3	16	1	2.81

NetEase presently has a consensus target price of $160.57, suggesting a potential upside of 38.89%. Walt Disney has a consensus target price of $127.61, suggesting a potential upside of 19.79%. Given NetEase’s higher probable upside, equities analysts plainly believe NetEase is more favorable than Walt Disney.

Dividends

NetEase pays an annual dividend of $1.91 per share and has a dividend yield of 1.7%. Walt Disney pays an annual dividend of $1.50 per share and has a dividend yield of 1.4%. NetEase pays out 26.3% of its earnings in the form of a dividend. Walt Disney pays out 30.9% of its earnings in the form of a dividend. Both companies have healthy payout ratios and should be able to cover their dividend payments with earnings for the next several years. NetEase is clearly the better dividend stock, given its higher yield and lower payout ratio.

Volatility and Risk

NetEase has a beta of 0.72, indicating that its share price is 28% less volatile than the S&P 500. Comparatively, Walt Disney has a beta of 1.41, indicating that its share price is 41% more volatile than the S&P 500.

Insider and Institutional Ownership

11.1% of NetEase shares are owned by institutional investors. Comparatively, 65.7% of Walt Disney shares are owned by institutional investors. 54.7% of NetEase shares are owned by company insiders. Comparatively, 0.2% of Walt Disney shares are owned by company insiders. Strong institutional ownership is an indication that endowments, hedge funds and large money managers believe a stock is poised for long-term growth.

Valuation & Earnings

This table compares NetEase and Walt Disney”s top-line revenue, earnings per share (EPS) and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
NetEase	$16.11 billion	4.60	$4.83 billion	$7.26	15.92
Walt Disney	$94.42 billion	1.95	$12.40 billion	$4.85	21.97

Walt Disney has higher revenue and earnings than NetEase. NetEase is trading at a lower price-to-earnings ratio than Walt Disney, indicating that it is currently the more affordable of the two stocks.

Summary

NetEase beats Walt Disney on 9 of the 17 factors compared between the two stocks.

About NetEase

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, Youdao Listening Pod, Youdao Smart Light, Youdao Pocket Translator, and Youdao Super Dictionary; 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 also 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.

About Walt Disney

The Walt Disney Company operates as an entertainment company worldwide. It operates through three segments: Entertainment, Sports, and Experiences. The company produces and distributes film and television video streaming content under the ABC Television Network, Disney, Freeform, FX, Fox, National Geographic, and Star brand television channels, as well as ABC television stations and A+E television networks; and produces original content under the ABC Signature, Disney Branded Television, FX Productions, Lucasfilm, Marvel, National Geographic Studios, Pixar, Searchlight Pictures, Twentieth Century Studios, 20th Television, and Walt Disney Pictures banners. It also offers direct-to-consumer streaming services through Disney+, Disney+ Hotstar, Hulu, and Star+; sports-related entertainment services through ESPN, ESPN on ABC, ESPN+ DTC, and Star; sale/licensing of film and episodic content to third-party television and VOD services; theatrical, home entertainment, and music distribution services; DVD and Blu-ray discs, electronic home video licenses, and VOD rental services; staging and licensing of live entertainment events; and post-production services. In addition, the company operates theme parks and resorts comprising Walt Disney World Resort, Disneyland Resort, Disneyland Paris, Hong Kong Disneyland Resort, Shanghai Disney Resort, Disney Cruise Line, Disney Vacation Club, National Geographic Expeditions, and Adventures by Disney, as well as Aulani, a Disney resort and spa in Hawaii. It also licenses its intellectual property to a third party for operations of the Tokyo Disney Resort; licenses trade names, characters, visual, literary, and other IP for use on merchandise, published materials, and games; operates a direct-to-home satellite distribution platform; sells branded merchandise through retail, online, and wholesale businesses; and develops and publishes books, comic books, and magazines. The company was founded in 1923 and is based in Burbank, California.