Netease.com Inc.
(NTES) Reaches New High
Chinese Internet portal Netease.com reached a new 52 week
high yesterday which also happened to be a 5 year high for the company.
Earnings Beat
The company
recently beat June quarter estimates by 25%, earning 49 cents when analysts
were expecting only 39 cents. This came after a March 2008 miss by 3.2%. The
earnings have been hit and miss on the expectations side, missing twice and
beating soundly twice in the last four quarters.
Fundamentals
The revenue
growth of the company has been one consistent factor over the past four
quarters and is expected to continue for the remainder of the year. Their
September report should show 46% revenue growth and analysts are expecting
35.8% revenue growth for the quarter ending in December compared to the prior
year.
The trailing price to earnings
ratio for the stock is low for a company growing at 40% a year, only 17.53. But
taken into account the Chinese stock market correction and the uneven earnings
growth, some caution by investors is appropriate.
The Trade
On a pull
back in the stock and a rally in the Chinese market, you could get long NTES
for a period of time. But I would not hold the stock through an earnings
announcement as they could miss again and you would need to re-evaluate the
position.