WEX (WEX) vs. NetEase (NTES) Critical Review

WEX (NYSE:WEX) and NetEase (NASDAQ:NTES) are both business services companies, but which is the better stock? We will compare the two businesses based on the strength of their analyst recommendations, risk, earnings, institutional ownership, dividends, valuation and profitability.

Valuation and Earnings

This table compares WEX and NetEase’s revenue, earnings per share (EPS) and valuation.

Gross Revenue Price/Sales Ratio Net Income Earnings Per Share Price/Earnings Ratio
WEX $1.25 billion 5.36 $160.26 million $4.70 33.11
NetEase $8.32 billion 3.84 $1.65 billion $12.41 19.61

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

Dividends

NetEase pays an annual dividend of $1.79 per share and has a dividend yield of 0.7%. WEX does not pay a dividend. NetEase pays out 14.4% of its earnings in the form of a dividend. NetEase has increased its dividend for 3 consecutive years.

Analyst Recommendations

This is a breakdown of recent recommendations and price targets for WEX and NetEase, as reported by MarketBeat.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
WEX 0 2 8 0 2.80
NetEase 1 2 10 0 2.69

WEX currently has a consensus target price of $194.10, suggesting a potential upside of 24.72%. NetEase has a consensus target price of $289.94, suggesting a potential upside of 19.11%. Given WEX’s stronger consensus rating and higher probable upside, equities research analysts plainly believe WEX is more favorable than NetEase.

Risk & Volatility

WEX has a beta of 1.6, indicating that its share price is 60% more volatile than the S&P 500. Comparatively, NetEase has a beta of 0.78, indicating that its share price is 22% less volatile than the S&P 500.

Profitability

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

Net Margins Return on Equity Return on Assets
WEX 15.63% 16.92% 4.37%
NetEase 9.22% 12.66% 7.60%

Insider and Institutional Ownership

97.1% of WEX shares are held by institutional investors. Comparatively, 45.3% of NetEase shares are held by institutional investors. 4.6% of WEX shares are held by insiders. Comparatively, 54.7% of NetEase shares are held by insiders. Strong institutional ownership is an indication that large money managers, endowments and hedge funds believe a company will outperform the market over the long term.

Summary

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

WEX Company Profile

WEX Inc. provides corporate card payment solutions in North and South America, the Asia Pacific, and Europe. It operates through three segments: Fleet Solutions, Travel and Corporate Solutions, and Health and Employee Benefit Solutions. The Fleet Solutions segment offers fleet vehicle payment and processing services. Its services include customer, account activation, and account retention services; authorization and billing inquiries, and account maintenance services; premium fleet services; credit and collections services; and merchant services. This segment markets its products directly to commercial and government vehicle fleet customers with small, medium, and large fleets, as well as with over-the-road and long haul fleets; and indirectly through co-branded and private label relationships. The Travel and Corporate Solutions segment provides payment processing solutions for corporate payment and transaction monitoring needs. Its products include virtual cards that are used for transactions where no card is presented and that require pre-authorization; and prepaid and gift card products that enables secure payment and financial management solutions with single card options, access to open or closed loop redemption, load limits, and with various expirations. This segment markets its products directly to commercial and government organizations. The Health and Employee Benefit Solutions segment offers healthcare payment products and software-as-a-service consumer directed platforms for healthcare market, as well as payroll related and employee benefit products in Brazil. The company was formerly known as Wright Express Corporation and changed its name to WEX Inc. in October 2012. WEX Inc. was founded in 1983 and is headquartered in South Portland, Maine.

NetEase Company Profile

NetEase, Inc. operates an interactive online community in the People's Republic of China. The company operates through Online Game Services; E-Commerce; Advertising Services; and Email and Others segments. It offers various games in a range of genres through mobile devices and PCs, including role playing games, MMORPGs, battle arena games, simulation games, collectible card games, first-person shooter games, sandbox games, and other types of games to the Chinese market. The company also operates Kaola that sells imported maternity and baby products, skincare and cosmetics, and other general merchandise; and Yanxuan, which sells its private label products, including apparel, homeware, kitchenware, and other general merchandise, as well as NetEase News App and NetEase Websites, which provide Internet users with Chinese language-based online services that are centered around content and interactive community. In addition, it provides online advertising services comprising banner advertising, channel sponsorships, direct email, interactive media-rich sites, sponsored special events, games, contests, and other activities; and email services to individual and corporate users. Further, NetEase, Inc. offers online services, such as CC, a live video streaming platform; Cloud Music, a music streaming platform; Wangyibao, a payment platform; EaseRead, an e-reading platform; NetEase Cloud Classroom, an online education platform; and Youdao Dictionary, an e-dictionary services platform. It has a collaboration agreement with Blizzard Entertainment, Inc. to co-develop a game in the storied Diablo franchise. 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 based in Beijing, the People's Republic of China.

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