Fact based stock research
Digital Arts (TSE:2326)

JP3549020000

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For every stock, we judge its performance against its peers and rank it on a scale of 1 to 100. The higher the rank, the better the stock performs than its peers. And, we do this for six investment strategies:
Value - shows how good of a value the stock is. Green is "inexpensive"; red is "expensive".

Growth - shows a company's growth potential. Green is "high growth" expected; red is "tough times ahead".

Safety - relates to the amount of debt a company has. Green is low debt level; red is high debt level.

Combined Financial - this isn't an average of the first three ranks but rather a consolidated view across several financial indicators. Green = good; red = tread carefully.

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Digital Arts stock research in summary

daj.jp

ANALYSIS: With an Obermatt Combined Rank of 44 (worse than 56% compared with investment alternatives), Digital Arts (Systems Software, Japan) shares have somewhat below-average financial characteristics compared with similar stocks. Shares of Digital Arts are a good value (attractively priced) with a consolidated Value Rank of 61 (better than 61% of alternatives), are safely financed (Safety Rank of 74, which means low debt burdens), but show below-average growth (Growth Rank of 27). ...read more

RECOMMENDATION: A Combined Rank of 44, is a hold recommendation based on Digital Arts's financial characteristics. As the company Digital Arts's key financial metrics exhibit good value (Obermatt Value Rank of 61) but low growth (Obermatt Growth Rank of 27) while being safely financed (Obermatt Safety Rank of 74), it may be a safer investment because companies with low debt can better withstand times of crises. Yet the good value, better than 61% of comparable companies, may also indicate that the company's future is challenging. If you believe that low growth is temporary or just due to a specific current event, you may conclude that the good value of the stock provides an attractive investment opportunity and the downside is limited due to below-average financing risks. Obermatt Premium subscribers can further check the stock’s Sentiment Ranks, which also flow into the Obermatt 360° View for investors. ...read more

Latest Obermatt Ranks


360° View^new
Sentiment Rank^new
Value Rank	61
Growth Rank	27
Safety Rank	74
Combined Rank	44

Country	Japan
Industry	Systems Software
Index
Size class	X-Small

14-Nov-2024. Stock data may be delayed. Log in or sign up to get the most recent research.

Further information

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Review the performance ranks of the individual metrics that form each investment strategy.

Research History: Digital Arts

RESEARCH HISTORY	2021	2022	2023	2024
VALUE
VALUE	44	57	65	61
GROWTH
GROWTH	100	31	7	27
SAFETY
SAFETY	68	91	91	74
SENTIMENT
SENTIMENT	n/a	96	34	^new
360° VIEW
360° VIEW	n/a	74	70	^new

Most recent update of the stock research: 14-Nov-2024. Financial reporting date used for calculating ranks: 30-Jun-2024. Stock research history is based on the Obermatt Method. The higher the rank, the better Digital Arts is in the corresponding investment strategy.
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Combined financial peformance in Detail

RESEARCH HISTORY	2021	2022	2023	2024
VALUE
VALUE	44	57	65	61
GROWTH
GROWTH	100	31	7	27
SAFETY
SAFETY	68	91	91	74
COMBINED
COMBINED	79	84	84	44

Last update of combined financial performance: 4-Jul-2024. Stock analysis on combined financial performance: The higher the rank of Digital Arts the better the performance.

Value Metrics in Detail

ANALYSIS: With an Obermatt Value Rank of 61 (better than 61% compared with alternatives), Digital Arts shares are more attractively priced than the majority of comparable stocks. The Value Rank is based on consolidating four value indicators, with half of the indicators below and half above average for Digital Arts. Price-to-Profit (also referred to as price-earnings, P/E) is 68 which means that the stock price compared with what market professionals expect for future profits is lower than for 68% of comparable companies, indicating a good value concerning Digital Arts's profit levels. The same is valid for Price-to-Book Capital (also referred to as market-to-book ratio) with a Price-to-Book Rank of 49, which means that the stock price is lower as regards to invested capital than for 49% of comparable investments. On the other hand, Price-to-Sales is less favorable than 89% of alternatives (only 11% of peers have an even less favorable ratio). The same is valid for dividend yield, which is lower than 25% of comparable companies, making the stock more expensive as regards to the company's expected dividend payouts. ...read more

RECOMMENDATION: The overall picture with a consolidated Value Rank of 61, is a buy recommendation based on Digital Arts's stock price compared with the company's operational size and dividend yields. This is a puzzling picture, because it means that profits are high while dividends are low. Since the stock price is low compared with invested capital but high in respect to expected revenues, it means that the company has more invested capital than peers for generating the same amount of revenue. Since profits are higher, it could be a "cash cow" situation (using the classic Boston Consulting BCG matrix naming convention) where the company is on a downward trend, still living from the profits of past products. As the company pays low dividends, it may harbor the opinion that a turnaround is possible, and it rather invests the cash than pay it out to shareholders, thus sealing the company's fate early. Any investment optimism should only be a buy trigger once thorough research is completed. We recommend further analyzing the stock with Obermatt’s Value, Safety, and Sentiment Ranks, including the 360° View, before making an investment decision, which is especially important in this case, as the financial indicators are inconclusive. ...read more

VALUE METRICS	2021	2022	2023	2024
PRICE VS. REVENUES (P/S)
PRICE VS. REVENUES (P/S)	24	24	30	11
PRICE VS. PROFITS (P/E)
PRICE VS. PROFITS (P/E)	66	48	73	68
PRICE VS. CAPITAL (Market-to-Book)
PRICE VS. CAPITAL (Market-to-Book)	12	34	43	49
DIVIDEND YIELD
DIVIDEND YIELD	67	72	83	75
CONSOLIDATED RANK: VALUE
CONSOLIDATED RANK: VALUE	44	57	65	61

Last update of Value Rank: 14-Nov-2024. Stock analysis on value ratios: The higher the rank, the lower the value ratio of Digital Arts; except for dividend yield where the rank is higher, the higher the yield.

Growth Metrics in Detail

ANALYSIS: With an Obermatt Growth Rank of 27 (better than 27% compared with alternatives), Digital Arts shows a below-average growth dynamic in its industry. There is limited momentum in this company. The Growth Rank is based on consolidating four value indicators, with half of the indicators below and half above average for Digital Arts. Sales Growth has a rank of 56 which means that currently professionals expect the company to grow more than 56% of its competitors. Stock Returns are also above average with a rank of 69. But Capital Growth has only a rank of 33, which means that currently professionals expect the company to grow its invested capital less than 67% of its competitors. Profit Growth is also low, with a rank of only 10, which means that, currently, professionals expect the company to grow its profits below average. ...read more

RECOMMENDATION: The overall picture with a consolidated Growth Rank of 27, is a hold recommendation for growth and momentum investors. This is a surprising picture, as the messages from the operating growth indicators of revenues, profits, and invested capital are mixed, while stock returns are above average. It may indicate new intellectual properties, such as brand improvement or a strong market position that shows in revenues but not in the capital. The low profit-growth rate may indicate an early phase where costs are still high, and revenues don't fully cover upfront investments or fixed costs. The positive investor outlook with a 69% peer outperformance is reaffirmed in this case which may be a good sign for an investment into a well-protected high-growth company. This fact needs to be confirmed by researching the company website and press. While momentum is a popular investment factor, the value aspect might be the more important one, in the longer term. We recommend analyzing the stock with Obermatt’s Value, Safety, and Sentiment Ranks to arrive at a 360° View of the stock purchase case, especially since the growth performance is mixed here. ...read more

GROWTH METRICS	2021	2022	2023	2024
REVENUE GROWTH
REVENUE GROWTH	80	34	39	56
PROFIT GROWTH
PROFIT GROWTH	78	66	19	10
CAPITAL GROWTH
CAPITAL GROWTH	n/a	31	35	33
STOCK RETURNS
STOCK RETURNS	57	35	23	69
CONSOLIDATED RANK: GROWTH
CONSOLIDATED RANK: GROWTH	100	31	7	27

Last update of Growth Rank: 14-Nov-2024. Stock analysis on growth metrics: The higher the rank, the higher the growth and returns of Digital Arts.

Safety Metrics in Detail

ANALYSIS: With an Obermatt Safety Rank of 74 (better than 74% compared with alternatives), the company Digital Arts has financing practices on the safer side, which mean that their overall debt burden is lower than average. This doesn't mean that the business of Digital Arts is safe, it only means that the company is on the safer side regarding possible bankruptcy, assuming that public reporting is correct. The Safety Rank is based on consolidating three financing indicators where two out of three are above average for Digital Arts.Leverage is at 100, meaning the company has a below-average debt-to-equity ratio. It has less debt than 100% of its competitors.Refinancing is at a rank of 61, meaning that the portion of the debt that is about to be refinanced is below average. It has less debt in the refinancing stage than 61% of its competitors. Liquidity is at 1, meaning that the company generates less profit to service its debt than 99% of its competitors. This indicates that the company is on the riskier side regarding debt service. ...read more

RECOMMENDATION: With a consolidated Safety Rank of 74 (better than 74% compared with alternatives), Digital Arts has a financing structure that is safer than that of its competitors. Low leverage and low refinancing risk mean a safer financing situation. However, low liquidity means that current company cash flows are low in relation to the level of debt. This is a sign of caution in case it is expected for profits to remain low. Investors should compare Obermatt’s Value, Growth, and Sentiment Ranks before deciding. They may also want to investigate why cash flows are expected to be low, making debt service for Digital Arts more challenging. ...read more

SAFETY METRICS	2021	2022	2023	2024
LEVERAGE
LEVERAGE	67	100	100	100
REFINANCING
REFINANCING	14	49	63	61
LIQUIDITY
LIQUIDITY	100	80	80	1
CONSOLIDATED RANK: SAFETY
CONSOLIDATED RANK: SAFETY	68	91	91	74

Last update of Safety Rank: 4-Jul-2024. Stock analysis on safety metrics: The higher the rank, the lower the leverage of Digital Arts and the more cash is available to service its debt.

Sentiment Metrics in Detail

SENTIMENT	2021	2022	2023	2024
ANALYST OPINIONS
ANALYST OPINIONS	n/a	97	97	^new
OPINIONS CHANGE
OPINIONS CHANGE	n/a	50	1	^new
PRO HOLDINGS
PRO HOLDINGS	n/a	94	33	^new
MARKET PULSE
MARKET PULSE	n/a	44	34	^new
CONSOLIDATED RANK: SENTIMENT
CONSOLIDATED RANK: SENTIMENT	n/a	96	34	^new

Last update of Sentiment Rank: 14-Nov-2024. Stock analysis on sentiment metrics: The higher the rank, the more positive the sentiment for Digital Arts.
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