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Youdao Inc (DAO) fair value: what the stock is really worth

As of Sep 23, 2026: fair value of Youdao Inc $15.23, price $14.62, upside +4.2%, quality 54 out of 100. Calculated from audited financials with 26 valuation models and 37 quality factors, updated daily.

  1. Fair value above price? Yes
  2. Good quality? Yes
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Consumer Defensive · US · ISIN US98741T1043

YI Youdao Inc logo Some data Sep 23, 2026

Youdao Inc

DAO · US

NeutralThe stock looks roughly fairly valued with average quality.

·Fair value $15.23 · Fairly valued (+4%)
!Quality 54/100
!Expensive Growth (revenue 5y +13.3 %/yr)
!Thin margins · 1.2% net margin (TTM)
Negative equity (buybacks among others) · generates free cash flow
!Trails peers (1/8)
!Narrow moat 32/100
!Evidence only medium, so the estimate is less certain
!Weak on future: 19 out of 100

What runs behind every stock

69 individual criteria per stock, every one traceable See the method →

Price vs Fair Value

$24.91 $3.01 Fair Value $15.23 Jun 2021 Sep 2026

White line = price, green steps = our fair value per fiscal year, dashed = 300-day average. As of Sep 23, 2026.

How to read this chart

60‑month range $3.01 – $24.91 · fair‑value band $10.81 – $27.55 · the $14.62 price screens below the $15.23 fair value. Dashed = 300-day average. As of Sep 23, 2026.

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Company profile

Youdao, Inc., an internet technology company, provides online services in the fields of content, community, communication, and commerce in the People's Republic of China. It operates through three segments: Learning Services, Smart Devices, and Online Marketing Services.

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Youdao, Inc., an internet technology company, provides online services in the fields of content, community, communication, and commerce in the People's Republic of China. It operates through three segments: Learning Services, Smart Devices, and Online Marketing Services. The Learning Services segment offers digital content services, which provides interactive learning features, such as Youdao Lingshi; STEAM courses, including Youdao iCode operated by Youdao Premium Courses; and adult courses comprising China University MOOC. The Smart Devices segment develops and offers smart devices, such as Youdao Dictionary Pen, Youdao Tutoring Pen, and Youdao Smart Learning Terminal. The Online Marketing Services Segment provides performance-based advertising, and global marketing and promotion services. It also offers Youdao Dictionary, a language app; other dictionary and translation tools; and AI-based learning tools, including Hi Echo, Mr. P AI Tutor and Scholar AI by Confucius LLM. In addition, the company licenses technologies and services through Youdao Smart Cloud. It provides learning content, applications, and solutions, which cover topics and target people from age groups through its websites and mobile applications. Youdao, Inc. was founded in 2006 and is headquartered in Hangzhou, China. Youdao, Inc. operates as a subsidiary of NetEase, Inc.

Stock analysis

Youdao Inc (DAO) currently trades at $14.62, while our model-based Fair Value estimate is $15.23, implying the stock looks roughly 4.0% fairly valued today.

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Valuation

Bull case: the Growth Earnings group reads highest at a median of $24.48 per share, and 16 of the 20 models we run sit above the $14.62 price.

Bear case: the Growth DCF group reads lowest at $10.90, and 4 of the 20 models stay below the price. Evidence for this calculation is medium.

Scenario range: $10.81 (bear) to $27.55 (bull), the price of $14.62 sits inside it. Bear and bull are the same models on cautious and optimistic assumptions, a range, not a price target.

Quality & growth

The Quality Score stands at 54/100 (solid quality), in the Consumer Defensive sector.

Expensive Growth: The company is growing, but growth may require heavy reinvestment or weak cash conversion.

Youdao Inc reported revenue of $5.9B in FY2025 versus $4.0B in FY2021, a compound +10.1%/yr. Reported net income was $107M in FY2025.

Key figures

Market cap $1.8B · P/E ratio 133.9 · P/S ratio 2.43 · EPS (TTM) $0.0900 · Net margin 1.8% · Return on assets (EBIT) −13.6% · Operating margin 4.3% · Revenue (TTM) $6.0B.

Competitive moat

Our AI-assisted moat analysis scores the competitive advantage at 38 out of 100 (low confidence).

What moves the price

The share trades about 21% below its 52-week high and 73% above its 52-week low, currently above its 200-day average.

For context, the median of 10 Consumer Defensive peers we cover trades at 17% fair-value upside, at 4%, DAO screens richer than that median.

Fair Value models

Bear $10.81 Fair Value $15.23 Bull $27.55
Model Each model values the company its own way (discounted cash flow, earnings, assets, dividends). The fair value above is their evidence-weighted blend, not the output of a single model. Based on fiscal year 2025 figures (about 9 months old). Earnings retained since then ($0.0658 per share) are deliberately not added. Bear Bear = the cautious scenario: the same model computed with conservative anchors (lower growth, margins and valuation multiples). Together with Bull it frames a plausible valuation range, not a price target.BaseBull Bull = the optimistic scenario: the same model computed with favourable anchors (higher growth, margins and valuation multiples). Together with Bear it frames a plausible valuation range, not a price target. Evidence Evidence = how well-backed THIS model's estimate is for this stock (0–100): how complete and reliable its input data are, and how well the model fits the company. The final Fair Value is an evidence-weighted blend, so better-evidenced models count more. Green ≥70, amber 50–69, grey below 50.
Highest evidence
EPV $9.62 $11.49 $13.05 74
FCF DCF $4.82 $9.98 $23.21 73
Growth DCF $4.39 $10.90 $21.84 73
All 20 models by family
DCF Models
FCF DCF $4.82 $9.98 $23.21 73
Owner Earnings $12.74 $30.20 $62.15 71
5Y Revenue Exit $10.72 $25.41 $52.59 67
5Y EBITDA Exit $10.93 $25.88 $51.63 70
5Y P/E Exit $8.32 $21.82 $39.07 67
10Y Revenue Exit $7.89 $22.71 $42.62 62
10Y EBITDA Exit $8.61 $23.07 $49.45 62
10Y P/E Exit $6.94 $18.65 $38.53 59
Earnings-Based
Graham-Dodd $6.09 $41.41 $58.04 63
Lynch FV $12.16 $17.37 $22.58 61
PEG = 1.0 $12.16 $17.37 $22.58 57
EPV $9.62 $11.49 $13.05 74
Multiples
P/E Multiple $14.78 $19.70 $24.63 63
P/S Multiple $11.42 $15.23 $19.03 58
EV/EBIT $21.60 $30.15 $38.71 66
EV/EBITDA $14.80 $21.09 $27.38 67
EV/Revenue $13.24 $20.65 $28.06 53
Growth DCF
Growth DCF $4.39 $10.90 $21.84 73
Economic Profit
ROIC Compounder $9.62 $11.49 $13.05 72
Growth Earnings
Growth-Adj P/E $17.14 $24.48 $31.83 67

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Quality Score breakdown

Overall quality 54/100

Of which business quality 53 · Market factors (momentum, volatility) 78

Profitability 66
Margins and returns on capital today
Quality Growth 30
Are margins and returns improving?
Cashflow 17
Earnings quality: real cash, not paper profit
Fin. Strength 61
Balance sheet, leverage, solvency risk
Investment 100
Disciplined investing over empire-building
Low Volatility 49
Calm price path (market factor)
Momentum 96
Price trend over the last 3–12 months (market factor)
52W Momentum 81
Distance to the 52-week high (market factor)
Net Issuance 64
Share count: buybacks or dilution?

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Revenue & earnings trend

Growth Quality Growth is valuable only when reinvestment earns attractive returns (Aswath Damodaran): sustainable growth depends on return on capital, reinvestment and efficiency. Basis: total company revenue over the periods shown on the cards (3Y/5Y/all years), not per share, so a merger can show up as a growth jump; per-share earnings growth is in the value-creation card. 62/100
The company is growing, but growth may require heavy reinvestment or weak cash conversion.
Revenue growth 1 year
+5.0%
Revenue growth 3 years Measures the company's TOTAL revenue from reported annual statements: compound average growth per year (CAGR) from the fiscal year 3, 5 or N years back to the most recent comparable fiscal year. Not per share: buybacks do not change this number, and a merger can appear as a growth jump. Per-share growth (which does include buybacks) is in the value-creation card.
+5.6%
Revenue growth 5 years Measures the company's TOTAL revenue from reported annual statements: compound average growth per year (CAGR) from the fiscal year 3, 5 or N years back to the most recent comparable fiscal year. Not per share: buybacks do not change this number, and a merger can appear as a growth jump. Per-share growth (which does include buybacks) is in the value-creation card.
+13.3%
Start year 2020 (pandemic)
Revenue growth 8 years Measures the company's TOTAL revenue from reported annual statements: compound average growth per year (CAGR) from the fiscal year 3, 5 or N years back to the most recent comparable fiscal year. Not per share: buybacks do not change this number, and a merger can appear as a growth jump. Per-share growth (which does include buybacks) is in the value-creation card.
+37.8%
Profit margin (trend) Operating margin then vs now, from reported annual statements. A falling margin after a boom year is the classic peak-earnings signal: the growth rate then leans on an inflated base.
−46.1% (2019) → 2.9% (2024)
What shareholders gained per year We only publish this rate when it is defensible. Reason: no profitable base year
not computed

Growth Forecast

A lot of optimism in the price
The price assumes more growth than the company has delivered so far and more than analysts expect.
What the price assumes This turns our valuation around: instead of asking what the share is worth, it asks what growth the current price requires. It uses the cash the company keeps after all spending (free cash flow), the same discount rate as our models, five years of growth, then slowing evenly to 2 % a year by year ten. Compared with the analysts' sales forecasts extended to the same five years (at least three analysts, for context only, it does not enter the Fair Value): within 3 percentage points counts as "in line" (amber), below that little optimism (green), above that a lot of optimism (red).
+41.0%
Yearly growth needed for the next five years to justify today's price.
What forecasts expect Analysts publish sales forecasts for the next two fiscal years. For the years after that, growth slows evenly to 2 % a year by year ten (2 % is the long-run rate our models use). Projected years are marked as such.
+11.5%
Yearly sales growth analysts expect, extended to five years.
After inflation (USA: IMF forecast 2.4% a year to 2030, 3.1% from 2016 to 2025) that is about +37.7% a year for the price and +8.9% for the forecasts.
Forecast 2026 (sales)+11.5%
Forecast 2027 (sales)+13.7%
Projected 2028 (sales)+12.2%
Projected 2029 (sales)+10.8%
Projected 2030 (sales)+9.3%

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Peer GroupHow this stock ranks against its industry: the green marker is this stock, the band is the typical 25–75% peer range, and the tick is the median.Education & Training Services · 136 stocks

Beats the industry median on 1/8 measures
Overall it trails its industry peers.
Valuation
Quality Score 54 · Below median
Fair Value upside +3% · Below median
Profitability
Return on equity (TTM) Negative equity The company's equity is below zero, for example after large share buybacks. A ratio to negative equity has no meaning, so we show no number here and do not rank it against the peer group.
Return on assets 7% · Top 25%
Net margin (TTM) 1% · Below median
Operating margin (TTM) 4% · Below median
Growth and dividend
Revenue growth 4% · Below median
Balance sheet
Debt / equity Negative equity The company's equity is below zero, for example after large share buybacks. A ratio to negative equity has no meaning, so we show no number here and do not rank it against the peer group.

Valuation Multiplesvs Education & Training Services median · lower = cheaper

P/E (TTM) 133.9× · Priciest 25%
P/B Negative equity The company's equity is below zero, for example after large share buybacks. A ratio to negative equity has no meaning, so we show no number here and do not rank it against the peer group.
P/FCF 59.7× · Priciest 25%

Strength profile in five axes (Snowflake)

VALUEFUTUREPASTHEALTHDIVIDEND
This stock
VALUEFUTUREPASTHEALTHDIVIDEND
Sector peers
VALUE (fair-value potential)39 · sector 45
FUTURE (revenue growth)19 · sector 24
PAST (return on equity)0 · sector 28
HEALTH (low debt)0 · sector 94
DIVIDEND (yield)0 · sector 57

PAST 0: with negative equity (buybacks among others) return on equity is not meaningfully computable.

Context: sector, industry, market

Values & ESG

Does this company touch areas you may want to avoid? The classification is inferred from sector and industry.

None of the checked exposures detected

Similar stocks

10 more Education & Training Services stocks, each showing price versus our Fair Value estimate.

Stock Price Fair Value vs Fair Value
New Oriental Education & Technology Group EDU $54.74 $63.95 +17%
TAL Education Group TAL $11.87 $33.07 +179%
Laureate Education, Inc LAUR $36.13 $39.95 +11%
Grand Canyon Education, Inc LOPE $146.78 $161.46 +10%
Physicswallah Limited PWL ₹136.35 ₹36.02 −74%
Covista Inc CVSA $123.00 $135.45 +10%
Stride, Inc LRN $78.69 $140.28 +78%
Universal Technical Institute, Inc UTI $20.41 $21.53 +5%
Perdoceo Education Corporation PRDO $31.23 $41.28 +32%
Strategic Education, Inc STRA $76.47 $105.48 +38%

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Frequently asked questions

Is Youdao Inc (DAO) overvalued or undervalued?
As of Sep 23, 2026, our model estimates a fair value of $15.23 versus a price of $14.62, about +4% upside (fairly valued).
What is the fair value of DAO?
Our model-based fair value for Youdao Inc is $15.23 (as of Sep 23, 2026), built from audited fundamentals. The current price: $14.62.
What is the quality score of DAO?
Youdao Inc has a Quality Score of 54/100. It measures business quality (profitability, growth, cash flow, balance-sheet strength, investment discipline, share issuance). Market factors such as price momentum and volatility do not enter the number; they are shown separately in the detail view.
What is the price target for Youdao Inc (DAO)?
Our model-based price target is the fair value of $15.23 (as of Sep 23, 2026) from 20 valuation models. Cautious scenario $10.81, optimistic scenario $27.55. It is a calculation from audited fundamentals, not an analyst target.
What is the Youdao Inc stock forecast for 2026?
Our models put fair value at $15.23, about +4% upside versus a price of $14.62 (fairly valued). Cautious scenario $10.81, optimistic scenario $27.55. The calculation is refreshed regularly with new filings.
What is the revenue of Youdao Inc (DAO)?
Youdao Inc reported trailing-twelve-month revenue of about $6.0B (latest available figure, as of Sep 23, 2026).
What growth is priced into Youdao Inc (DAO)?
For today's price to be fair in a discounted-cash-flow model, Youdao Inc would have to grow free cash flow by +41.0 % per year for five years (discount rate 10.0 %, then slowing evenly to 2 % perpetual growth by year ten). Over the last 5 years revenue grew +13.3 % per year. As of Sep 23, 2026.
What discount rate (WACC) does the fair value of DAO use?
Our models discount Youdao Inc at 10.0 %: a base by market capitalisation (small), damped by beta 0.56, country premium for USA. The same rate applies in all 26 models.
What is a reverse DCF?
A reverse DCF turns the usual calculation around. Instead of deriving a value from assumptions, it takes today's price as given and asks: what free-cash-flow growth would a company have to deliver for exactly this price to be fair? The result is not a forecast but the expectation already priced in. For Youdao Inc that is +41.0 % per year a year over ten years, using the same discount rate (10.0 %) and the same formula as our fair value.
How much growth has Youdao Inc (DAO) delivered so far?
Over the past 5 years revenue at Youdao Inc grew +13.3 % a year. The price currently implies +41.0 % per year free-cash-flow growth a year. Comparing the two shows how much confidence is in the price: if it demands more than has been delivered, the business has to accelerate for the maths to work.
How fast is the sector of Youdao Inc (DAO) growing?
The median revenue growth in the sector is +2.5 % a year. That is the yardstick for the growth priced into Youdao Inc (+41.0 % per year a year): it shows whether the expectation is within the usual range or beyond it.
What is the free cash flow yield of Youdao Inc (DAO)?
The free-cash-flow yield on the price is 1.69 %: that much free cash flow Youdao Inc produces per unit of market value. When it exceeds the discount rate of our models (10.0 %), the business already earns more than its cost of capital demands, and the price needs little additional growth.
What is the intrinsic value of Youdao Inc (DAO)?
Intrinsic value and fair value mean the same thing: what the business is worth on its numbers, independent of the share price. For Youdao Inc it is $15.23 per share (as of Sep 23, 2026), against a price of $14.62. It is the blended result of 20 valuation models (cash flow, earnings, asset, dividend).
Is Youdao Inc stock overvalued or undervalued in 2026?
As of Sep 23, 2026, DAO trades below its calculated fair value: price $14.62, fair value $15.23, a gap of about +4% (fairly valued). The calculation is refreshed with each new quarterly report, so the verdict can change during the year.
Is fair value the same as the market price of DAO?
No. The price is what the market pays today ($14.62); the fair value is what the company's own numbers justify ($15.23). For Youdao Inc the two are $0.6100 per share apart. That gap is exactly why we show both numbers side by side.
How much is Youdao Inc worth?
The market values Youdao Inc at about $1.8B (market capitalisation, as of Sep 23, 2026). Per share that is $14.62; our models calculate a fair value of $15.23 per share.
What do the bullish and bearish scenarios say about DAO?
Our models span a range for Youdao Inc: cautious scenario $10.81, base $15.23, optimistic $27.55 per share (as of Sep 23, 2026, price $14.62). The range comes from different growth and margin assumptions, not from analyst opinions.
What is the P/E ratio of DAO?
Youdao Inc trades at a price-to-earnings ratio of 133.9 (as of Sep 23, 2026). A P/E on its own says little: it compares the price with ONE year of profit, while our fair value of $15.23 is built from several models across several years.
How solid is the balance sheet of Youdao Inc (DAO)?
Balance-sheet figures for Youdao Inc (as of Sep 23, 2026): negative equity, so no return on equity and no debt-to-equity ratio. They feed the Quality Score of 54/100, which measures business quality independently of the share price.
How far is DAO from its 52-week high?
Youdao Inc trades at $14.62, about 21% below its 52-week high of $18.45 and 73% above the low of $8.43 (as of Sep 23, 2026). Distance from the high says nothing about value: that is what the fair value of $15.23 is for.
Which stocks are comparable to Youdao Inc?
From the same area (Consumer Defensive) we also value New Oriental Education & Technology Group, TAL Education Group, Laureate Education, Inc, Grand Canyon Education, Inc, among others. Each of them has its own fair-value calculation on this site using the same models, so the comparison is like for like.
Is Youdao Inc stock attractive at the current price?
The data as of Sep 23, 2026: price $14.62, calculated fair value $15.23 (+4%), Quality Score 54/100, from 20 models. Whether that fits your horizon and risk tolerance is your call. We provide the calculation, not investment advice.
How is the fair value of DAO calculated?
We run Youdao Inc through 20 models from four families: discounted cash flow, earnings models, asset and balance-sheet models, and dividend models. Every model gets the same audited fundamentals; the result is the weighted average of $15.23, with the spread shown as a cautious and an optimistic scenario.
Is it still worth investing in stocks now?
The global stock market currently sits 14.1 % above its aggregate fair value. Youdao Inc currently trades 4 % below its own fair value, and the market average says nothing about that. An expensive market is no reason to stay out and no reason to buy everything at once: keep a broad savings plan running, buy single stocks only with money you can do without, and hold part of your money liquid while the market is high. The full picture including sectors is on is it worth investing now.
What is the share price of Youdao Inc (DAO)?
The closing price on Sep 23, 2026 was $14.62. Our model-based fair value is $15.23, about +4% upside (fairly valued). We carry closing prices from our data provider, not a live tick.
What should I pay attention to with Youdao Inc right now?
The price sits close to our fair value, market and models broadly agree here, little valuation tension. A fairly wide model range ($10.81 to $27.55) leaves room in how you read the outcome.

Key figures of Youdao Inc

How large is the market capitalisation of Youdao Inc (DAO)?
The market capitalisation of Youdao Inc is $1.8B. The stock-market value of the whole company: share price times number of shares. It is what the market asks for the entire business today.
What is the P/S ratio of Youdao Inc (DAO)?
The price-to-sales ratio of Youdao Inc is 2.43 (P/E × margin). Price to sales: market value relative to yearly revenue. Useful when profit is thin or distorted.
What are the earnings per share of Youdao Inc (DAO)?
Earnings per share at Youdao Inc are $0.0900 (price ÷ EPS = P/E 133.9). Earnings per share over the last twelve months: total profit spread across every single share.
What is the net margin of Youdao Inc (DAO)?
The net margin of Youdao Inc is 1.8% (fiscal year 2025). How much of every unit of revenue ends up as profit. 10% means 10 cents of profit per dollar of sales.
What is the EBIT return on assets of Youdao Inc (DAO)?
On an EBIT basis the return on assets of Youdao Inc is −13.6% (avg 5y). Operating profit (EBIT) relative to everything the company owns, as a multi-year average. It describes the business model rather than one good or bad year.
What is the operating margin of Youdao Inc (DAO)?
The operating margin of Youdao Inc is 4.3% (last twelve months). Profit from the core business (before interest and taxes) relative to revenue.
How fast is revenue growing at Youdao Inc (DAO)?
Revenue at Youdao Inc is growing +3.8% versus a year earlier (3y avg +5.6%). How much revenue grew versus a year earlier (YoY). The 3-year average next to it puts the single year in context.
How fast are earnings growing at Youdao Inc (DAO)?
Earnings per share at Youdao Inc are growing −50.0% versus a year earlier. How much earnings per share grew versus a year earlier.
How much net debt does Youdao Inc (DAO) carry?
The net debt of Youdao Inc is $1.4B (fiscal year 2025, ≈ 47.5 yrs of FCF). Debt minus cash on hand. The note shows how many years of free cash flow could in theory pay it off.
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