NetEaseNETTF -0.98%93 Degree of Operating Leverage is 2.25 as of Mar. 2026. GuruFocus rates NETTF with a GF Score™ of 93/100 and a GF Value™ of $22.96 (Fairly Valued). The stock has 1 warning sign investors should review. Among 534 Interactive Media companies, NetEase ranks worse than 64.42% on this metric.
Degree of Operating Leverage (DOL) measures the percentage change in EBIT for a unit change in Revenue.
NetEase's Degree of Operating Leverage for the quarter that ended in Mar. 2026 was 2.25. The higher Degree of Operating Leverage, the higher operating risk the company will take.
The industry rank for NetEase's Degree of Operating Leverage or its related term are showing as below:
NETTF's Degree of Operating Leverage is ranked worse than 64.42% of 534
companies
in the Interactive Media industry
Industry Median: 0.775
vs NETTF: 2.25
NetEase (OTCPK:NETTF) Degree of Operating Leverage Explanation
Degree of Operating Leverage (DOL) is a leverage ratio that measures the sensitivity of a company’s operting income, also referred to as Earnings Before Interest and Taxes (EBIT), to fluctuations in its Revenue. DOL is a method used to quantify a company’s operating risk. This risk is related to the company's structure of variable costs and fixed costs. Since the fixed costs do not allow the company to adjust the operating costs, the operating risk rises with a higher fixed-to-variable costs proportion.
A high Degree of Operating Leverage indicates that the company’s fixed costs exceed its variable costs. By increasing the sales, the company can earn more profits. In addition, the company must be able to maintain relatively high sales to cover all fixed costs.
Be Aware
The use of operating leverage varies across different industries and business sectors, and the application of Degree of Operating Leverage (DOL) should be adjusted accordingly.
NetEase Degree of Operating Leverage Related Terms
NetEase Degree of Operating Leverage Historical Data
* Premium members only.
The historical data trend for NetEase's Degree of Operating Leverage can be seen below:
* For Operating Data section: All numbers are indicated by the unit behind each term and all currency related amount are in USD. * For other sections: All numbers are in millions except for per share data, ratio, and percentage. All currency related amount are indicated in the company's associated stock exchange currency.
NETTF vs EA, TTWO, RBLX: Degree of Operating Leverage Comparison
For the Electronic Gaming & Multimedia subindustry, NetEase's Degree of Operating Leverage, along with its competitors' market caps and Degree of Operating Leverage data, can be viewed below:
* Competitive companies are chosen from companies within the same industry, with headquarter located in same country, with closest market capitalization; x-axis shows the market cap, and y-axis shows the term value; the bigger the dot, the larger the market cap. Note that "N/A" values will not show up in the chart.
NetEase Degree of Operating Leverage vs Interactive Media Industry
For the Interactive Media industry and Communication Services sector, NetEase's Degree of Operating Leverage distribution charts can be found below:
* The bar in red indicates where NetEase's Degree of Operating Leverage falls into.
* For Operating Data section: All numbers are indicated by the unit behind each term and all currency related amount are in USD. * For other sections: All numbers are in millions except for per share data, ratio, and percentage. All currency related amount are indicated in the company's associated stock exchange currency.
** TTM data of EBIT and Revenue was used to calculate Degree of Operating Leverage.
*** Please be aware that the Degree of Operating Leverage calculations are based on company-level data using the primary share class. The calculated data provided is for demonstration purposes and may slightly differ from the results displayed in the title due to potential variations caused by currency exchange rate differences throughout the year.
What does a Degree of Operating Leverage of 2.25 mean?
NetEase (NETTF) has a Degree of Operating Leverage of 2.25 as of Mar. 2026. Degree of Operating Leverage (DOL) measures the percentage change in EBIT for a unit change in Revenue. View historical data for NetEase and its competitors. According to the industry distribution chart, NetEase ranks #344 out of 534 companies in the Interactive Media industry, placing it in the top 64.4%.
Is NetEase's Degree of Operating Leverage too high?
NetEase's current Degree of Operating Leverage is 2.25. The Interactive Media industry median Degree of Operating Leverage is 0.78. NetEase's value of 2.25 is 190.3% above this industry median. Based on the distribution chart, NetEase ranks #344 out of 534 companies in the Interactive Media industry, which is below the industry midpoint. Overall, NetEase has a GF Score™ of 93/100 and is considered Fairly Valued, reflecting its overall financial health beyond just this single metric.
How does NetEase's Degree of Operating Leverage compare to EA and TTWO?
According to the Interactive Media industry distribution chart, NetEase ranks #344 out of 534 companies for Degree of Operating Leverage. This places NetEase in the lower half of its industry. The industry median Degree of Operating Leverage is 0.78. NetEase's value of 2.25 is 190.3% above this benchmark. See the competitive comparison table and distribution chart on this page for a detailed peer-by-peer breakdown.
What is a good Degree of Operating Leverage for an Interactive Media company?
The median Degree of Operating Leverage among Interactive Media companies is 0.78, based on 534 companies in the industry. Companies in the top quartile (top 25%) have a Degree of Operating Leverage significantly above this median, while those in the bottom quartile fall well below. However, Degree of Operating Leverage should not be evaluated in isolation — investors should consider it alongside profitability, growth, and financial strength metrics. NetEase's current Degree of Operating Leverage of 2.25 is 190.3% above the industry median. Use the industry distribution chart on this page to see where any company falls relative to its peers.
What does a high Degree of Operating Leverage mean?
A high Degree of Operating Leverage can signal that a stock is expensive relative to its fundamentals. Degree of Operating Leverage (DOL) measures the percentage change in EBIT for a unit change in Revenue. View historical data for NetEase and its competitors. For the Interactive Media industry, the median Degree of Operating Leverage is 0.78 — values significantly above this may indicate overvaluation, while values below may suggest a bargain or underlying issues. NetEase's current Degree of Operating Leverage is 2.25. However, context matters — high-growth companies often justify higher valuations. Always evaluate alongside other metrics like GF Score™ and GF Value™.
Is NetEase stock overvalued right now?
Based on GuruFocus' analysis, NetEase (NETTF) is currently considered Fairly Valued. The stock's GF Value™ is $22.96, compared to a current price of $24.26 — trading 5.7% above its estimated fair value. The current Degree of Operating Leverage is 2.25 and 190.3% above the Interactive Media industry median of 0.78. NetEase's overall GF Score™ is 93/100 with 1 warning sign to review. Investors should evaluate multiple metrics — including profitability, growth, and financial strength — before making a decision.
How is Degree of Operating Leverage calculated?
Degree of Operating Leverage is calculated from a company's financial statements. For NetEase (NETTF), the current Degree of Operating Leverage is 2.25 as of Mar. 2026. GuruFocus calculates this using data sourced from SEC filings and annual reports. See the calculation section and 30-year financial data on this page for the full breakdown.
Is NetEase (NETTF) Overvalued in 2026?
Based on GuruFocus' analysis, NetEase stock appears to be overvalued.
The current stock price of $24.26 is trading 5.7% above its estimated GF Value™ of $22.96.
GuruFocus considers NetEase to be Fairly Valued.
Key valuation signals for NETTF:
Degree of Operating Leverage: 2.25
GF Value™: $22.96 vs. price of $24.26 (5.7% above fair value)
Industry Position: 190.3% above the Interactive Media median (#344 of 534)
No single metric tells the full story. See the NETTF stock analysis page for a complete view including 30-year financials, guru trades, and insider activity.
Founded in the late 1990s as an internet portal, NetEase has evolved into China's second-largest online gaming company. Its early success was anchored by the massively multiplayer online role-playing game Fantasy Westward Journey, which laid the foundation for a durable franchise strategy. Over the past decade, the company has expanded its portfolio with successful titles such as Justice, Identity V, Naraka: Bladepoint, and Eggy Party, all of which continue to maintain sizable and engaged player bases.In addition to its in-house development capabilities, NetEase partners with global IP holders such as Microsoft and Marvel to develop and publish titles based on established franchises, including World of Warcraft, Diablo Immortal, and Marvel Rivals, further strengthening its global presence.
93GF Score
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