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Is a Beat Likely for NetEase (NTES) This Earnings Season?

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NetEase (NTES - Free Report) is set to report third-quarter 2023 results on Nov 16.

The Zacks Consensus Estimate for third-quarter revenues currently stands at $3.8 billion, suggesting an increase of 10.8% from the figure reported in the year-ago quarter.

The consensus mark for earnings has moved upward by 9 cents to $1.65 per share over the past 30 days, indicating a 3.8% increase from the year-ago quarter’s reported figure.

The company’s earnings beat the Zacks Consensus Estimate thrice in the trailing four quarters while missing on one occasion, the average surprise being 24.5%.

Let’s see how things have shaped up for this announcement.

NetEase, Inc. Price and EPS Surprise NetEase, Inc. Price and EPS Surprise

NetEase, Inc. price-eps-surprise | NetEase, Inc. Quote

Factors to Consider

NetEase’s diversified online gaming portfolio is expected to have been a major contributor to the top line in the to-be-reported quarter.

NetEase’s expanding gaming portfolio in 2023, including The Lord of the Rings: Rise to War, Harry Potter: Magic Awakened: Harry Potter: Magic Awakened, Identity V, Justice Online Mobile, Infinite Borders, NARAKA: BLADEPOINT, Ace Racer, Once Human and Vikingard, is expected to have driven user growth and contributed to the company’s top line in the soon-to-be-reported quarter.

Further, NTES’ expanded international presence through strategic mergers and acquisitions and the opening of new internal studios across Japan, Europe and North America is likely to have boosted its third-quarter top line.

Additionally, the company focuses on dynamic, premium content across its family of apps because it attracts people and keeps them attached. Its music business is likely to have continued to benefit from this focus, thereby making strong contributions in the to-be-reported quarter. Its Youdao business is anticipated to have also done well during the third quarter, driven by the company’s sustained focus on adding fresh content.

However, increasing government regulations related to gaming and stiff competition from Tencent are expected to have negatively impacted the top line.

Earnings Whispers

Our proven model predicts an earnings beat for NetEase this earnings season. The combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) increases the chances of an earnings beat, which is the case here.

Earnings ESP: Earnings ESP, which represents the difference between the Most Accurate Estimate and the Zacks Consensus Estimate, is +0.30%. You can uncover the best stocks to buy or sell before they are reported with our Earnings ESP Filter.

Zacks Rank: NTES sports a Zacks Rank #1.

Other Stocks With the Favorable Combination

Per our model, Synopsys (SNPS - Free Report) , Snowflake (SNOW - Free Report) and Keysight Technologies (KEYS - Free Report) also have the right combination of elements to post an earnings beat in their upcoming releases.

Synopsys carries a Zacks Rank #2 and has an Earnings ESP of +0.94%. The company is scheduled to report fourth-quarter fiscal 2023 results on Nov 29. Its earnings surpassed the Zacks Consensus Estimate in the trailing four quarters, the average surprise being 4.2%. You can see the complete list of today’s Zacks #1 Rank stocks here.

The Zacks Consensus Estimate for Synopsys’ fourth-quarter earnings is pegged at $3.04 per share, indicating a year-over-year increase of 59.2%. The consensus mark for revenues stands at $1.58 billion, suggesting a year-over-year surge of 23.3%.

Snowflake is slated to report third-quarter fiscal 2024 results on Nov 29. The company has a Zacks Rank #2 and an Earnings ESP of +15.71% at present. Snowflake’s earnings beat the Zacks Consensus Estimate in the trailing four quarters, the average surprise being 244.5%.

The Zacks Consensus Estimate for third-quarter earnings is pegged at 15 cents per share, suggesting an increase of 36.4% from the year-ago quarter’s earnings of 11 cents. Snowflake’s quarterly revenues are estimated to grow 27.6% year over year to $710.5 million.

Keysight carries a Zacks Rank #3 and has an Earnings ESP of +0.18%. The company is scheduled to report fourth-quarter fiscal 2023 results on Nov 20. Its earnings beat the Zacks Consensus Estimate in the preceding four quarters, with the average surprise being 8.3%.

The Zacks Consensus Estimate for Keysight’s fourth-quarter earnings stands at $1.87 per share, indicating a year-over-year decline of 12.6%. It is estimated to report revenues of $1.3 billion, which suggests a decrease of approximately 10% from the year-ago quarter.

Stay on top of upcoming earnings announcements with the Zacks Earnings Calendar.

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