Fact based stock research
East Japan Railway (TSE:9020)

JP3783600004

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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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East Japan Railway stock research in summary

jreast.co.jp

ANALYSIS: With an Obermatt Combined Rank of 23 (worse than 77% compared with investment alternatives), East Japan Railway (Railroads, Japan) shares have lower financial characteristics compared with similar stocks. Shares of East Japan Railway are low in value (priced high) with a consolidated Value Rank of 23 (worse than 77% of alternatives), and are riskily financed (Safety Rank of 9, which means above-average debt burdens) but show above-average growth (Growth Rank of 61). ...read more

RECOMMENDATION: A Combined Rank of 23, is a sell recommendation based on East Japan Railway's financial characteristics. As the company East Japan Railway shows low value with an Obermatt Value Rank of 23 (77% of comparable investments are less expensive), investors should look at the other ranks. In this case, growth is expected to be above-average, better than 61% of comparable companies (Obermatt Growth Rank is 61). This is a typical case. Companies with above average growth tend to cost more than stocks with slower growth expectations. If this is a high-growth company, the low Obermatt Safety Rank of 9 is a good sign. The more debt a well-performing company has, the higher the returns to shareholders. However, if growth turns negative or interest rates increase, high debt may become a burden. If you believe the future is bright for East Japan Railway, even a low-value company (in terms of its key financial indicators) can be a good investment. 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	23
Growth Rank	61
Safety Rank	9
Combined Rank	23

Country	Japan
Industry	Railroads
Index	TOPIX 100, Energy Efficient, Nikkei 225
Size class	XX-Large

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: East Japan Railway

RESEARCH HISTORY	2021	2022	2023	2024
VALUE
VALUE	25	55	41	23
GROWTH
GROWTH	34	85	57	61
SAFETY
SAFETY	14	4	3	9
SENTIMENT
SENTIMENT	n/a	18	28	^new
360° VIEW
360° VIEW	n/a	27	12	^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 East Japan Railway is in the corresponding investment strategy.
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Combined financial peformance in Detail

RESEARCH HISTORY	2021	2022	2023	2024
VALUE
VALUE	25	55	41	23
GROWTH
GROWTH	34	85	57	61
SAFETY
SAFETY	14	4	3	9
COMBINED
COMBINED	14	40	15	23

Last update of combined financial performance: 14-Nov-2024. Stock analysis on combined financial performance: The higher the rank of East Japan Railway the better the performance.

Value Metrics in Detail

ANALYSIS: With an Obermatt Value Rank of 23 (worse than 77% compared with alternatives), East Japan Railway shares are significantly more expensive than comparable stocks. The Value Rank is based on consolidating four value indicators, with all four indicators below average for East Japan Railway. Price-to-Sales is 40 which means that the stock price compared with what market professionals expect for future profits is higher than 60% of comparable companies, indicating a low value concerning East Japan Railway's sales levels. Price-to-Book Capital (also referred to as market-to-book ratio) also has a low Price-to-Book Rank of 47, which means that both reliable company size indicators, sales, and invested capital cannot explain the high stock price of East Japan Railway. In addition, the two profit-related value indicators, Price-to-Profit (also referred to as price-earnings, P/E) with a low rank of 31 and Dividend Yield, which is lower than 73% of comparable companies, also make the stock more expensive compared with investment alternatives. ...read more

RECOMMENDATION: The overall picture with a consolidated Value Rank of 23, is a sell recommendation based on East Japan Railway's stock price compared with the company's operational size and dividend yields. How can market participants pay such a high price for East Japan Railway? One reason may be that the company is simply too popular. If enough people want a particular stock, its price can exceed reasonable levels. This is often the case for companies offering new and exciting products and everybody wants a piece of the action. Should you pay a lot for a hot stock such as East Japan Railway? It's risky, and even if the stock price continues to grow because of popular demand, it may return to more typical lower levels later. And that return can be sudden and quick, making it impossible for retail investors to exit on time. Sometimes, high prices are deserved. This is the case when it is justified to believe that the company will dominate a market with high profit margins. It has happened in the past for many technology companies and indeed for commercially successful pharmaceutical discoveries. Sometimes they last, sometimes, they get eaten alive. East Japan Railway may be such a type of stock. That would mean, retail investors should be careful, only considering investing a small part of their wealth in this exciting category and always being ready to lose more than half, if not all of the investment. 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 essential 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)	56	54	48	40
PRICE VS. PROFITS (P/E)
PRICE VS. PROFITS (P/E)	1	31	39	31
PRICE VS. CAPITAL (Market-to-Book)
PRICE VS. CAPITAL (Market-to-Book)	68	74	66	47
DIVIDEND YIELD
DIVIDEND YIELD	42	45	36	27
CONSOLIDATED RANK: VALUE
CONSOLIDATED RANK: VALUE	25	55	41	23

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

Growth Metrics in Detail

ANALYSIS: With an Obermatt Growth Rank of 61 (better than 61% compared with alternatives), East Japan Railway shows an above-average growth dynamic in its industry. Investors also speak of positive momentum. The Growth Rank is based on consolidating four value indicators, with half of the indicators below and half above average for East Japan Railway. Sales Growth has a rank of 63 which means that currently professionals expect the company to grow more than 63% of its competitors. Stock Returns are also above average with a rank of 65. But Capital Growth has only a rank of 35, which means that currently professionals expect the company to grow its invested capital less than 65% of its competitors. Profit Growth is also low, with a rank of only 47, 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 61, is a buy 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 65% 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	23	80	12	63
PROFIT GROWTH
PROFIT GROWTH	17	42	77	47
CAPITAL GROWTH
CAPITAL GROWTH	n/a	88	70	35
STOCK RETURNS
STOCK RETURNS	72	51	53	65
CONSOLIDATED RANK: GROWTH
CONSOLIDATED RANK: GROWTH	34	85	57	61

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

Safety Metrics in Detail

ANALYSIS: With an Obermatt Safety Rank of 9 (better than 9% compared with alternatives), the company East Japan Railway has much riskier financing practices than comparable other companies, which means that their overall debt burden is significantly above the industry average. This doesn't mean that the business of East Japan Railway is also risky, it only means that the company is on the riskier side in respect to bankruptcy in case things turn sour, assuming that public reporting is correct. The Safety Rank is based on consolidating three financing indicators, with all three metrics below average for East Japan Railway. Liquidity is at 36, meaning that the company generates less profit to service its debt than 64% of its competitors. This indicates that the company is on the riskier side when it comes to debt service. Even worse, Leverage is at a rank of 4, meaning the company has an above-average debt-to-equity ratio. It has more debt than 96% of its competitors. Finally, Refinancing is at a rank of 29 which means that the portion of the debt about to be refinanced is above average. It has more debt in the refinancing stage than 71% of its competitors. ...read more

RECOMMENDATION: With a consolidated Safety Rank of 9 (worse than 91% compared with alternatives), East Japan Railway has a financing structure that is significantly riskier than that of its competitors. This combination is rather dangerous in most situations. Only very promising companies with bright future outlooks and stellar reputations can operate with such risky financing. Investors should look at Obermatt’s Value, Growth, and Sentiment Ranks to confirm a very positive outlook or be careful with investing in stocks of East Japan Railway because it may suffer significantly in case of future difficulties. ...read more

SAFETY METRICS	2021	2022	2023	2024
LEVERAGE
LEVERAGE	16	28	6	4
REFINANCING
REFINANCING	14	7	31	29
LIQUIDITY
LIQUIDITY	17	10	12	36
CONSOLIDATED RANK: SAFETY
CONSOLIDATED RANK: SAFETY	14	4	3	9

Last update of Safety Rank: 14-Nov-2024. Stock analysis on safety metrics: The higher the rank, the lower the leverage of East Japan Railway 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	22	27	^new
OPINIONS CHANGE
OPINIONS CHANGE	n/a	50	40	^new
PRO HOLDINGS
PRO HOLDINGS	n/a	57	95	^new
MARKET PULSE
MARKET PULSE	n/a	25	11	^new
CONSOLIDATED RANK: SENTIMENT
CONSOLIDATED RANK: SENTIMENT	n/a	18	28	^new

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