NetEase (NTES) to Report Q2 Earnings: What's in the Cards?
NetEase NTES is set to report second-quarter 2020 results on Aug 13.
The Zacks Consensus Estimate for second-quarter revenues currently stands at $2.46 billion, suggesting a decline of 9.9% from the figure reported in the year-ago quarter.
The consensus mark for earnings has increased 2.2% to $3.74 per share over the past 30 days, indicating growth of 8.7% from the year-ago quarter’s reported figure.
Notably, the company’s earnings beat the Zacks Consensus Estimate in the trailing four quarters, the average surprise being 138.13%.
NetEase, Inc. Price and EPS Surprise
NetEase, Inc. price-eps-surprise | NetEase, Inc. Quote
Let’s see how things have shaped up for this announcement.
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.
Moreover, coronavirus-led lockdown is expected to have driven the number of active users in the to-be-reported quarter.
NetEase’s subscriber growth is expected to reflect the benefits of an expanded gaming portfolio in 2020 including Fantasy Westward Journey 3D, Xuan Yuan Sword: Dragon Upon the Cloud, Bloom & Blade, Onmyoji: The Card Game, Champion of the Fields, The Ninth Institute, and Astracraft, which are expected to have driven user growth and contributed to the company’s top line in the soon-to-be reported quarter.
Moreover, the availability of Activision Blizzard’s ATVI World of Warcraft Classic in China and continued popularity of the franchise is expected to have aided subscriber growth in the to-be-reported quarter amid coronavirus induced confinement.
Further, its expanded international presence with titles like Knives Out, Identity V and Marvel Super War is noteworthy.
Meanwhile, increased efforts to monetize NetEase Cloud Music are expected to have driven Innovative business segment’s top line.
However, a weak advertising market in China, increasing government regulations related to gaming and stiff competition from Tencent are expected to have negatively impacted the top line.
Moreover, a weak online advertising environment is expected to have hurt NetEase Cloud Music’s top line in the second quarter.
Key Developments in Q2
On Jun 1, NetEase launched its Hong Kong Public Offering, which is part of the Global Offering of 171,480,000 new ordinary shares and listing of its ordinary shares on the Main Board of The Stock Exchange of Hong Kong Limited under the stock code 9999.HK.
The final offer price for both the International Offering and the Hong Kong Public Offering has been set at HK$123 per Share.
What Our Model Says
According to the Zacks model, the combination of a positive Earnings ESP and Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) increases the odds of an earnings beat. But that’s not the case here.
NetEase has an Earnings ESP of 0.00% and a Zacks Rank #3. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.
Stocks to Consider
Here are a couple of companies, which, per our model, have the right combination of elements to post an earnings beat in their upcoming release.
Deere & Company DE has an Earnings ESP of +4.64% and a Zacks Rank #2. You can see the complete list of today’s Zacks #1 Rank stocks here.
Agilent Technologies, Inc. A has an Earnings ESP of +5.00% and a Zacks Rank #2.
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