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Japan Tobacco (TSE:2914)

JP3726800000

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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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Japan Tobacco stock research in summary

jti.co.jp

ANALYSIS: With an Obermatt Combined Rank of 63 (better than 63% compared with investment alternatives), Japan Tobacco (Tobacco, Japan) shares have above-average financial characteristics compared with similar stocks. Shares of Japan Tobacco are low in value (priced high) with a consolidated Value Rank of 45 (worse than 55% of alternatives). But they show above-average growth (Growth Rank of 61) and are safely financed (Safety Rank of 53, which means below-average debt burdens). ...read more

RECOMMENDATION: A Combined Rank of 63, is a buy recommendation based on Japan Tobacco's financial characteristics. Investors looking for growth and low financial risk may find this stock attractive. While the company Japan Tobacco exhibits low value (Obermatt Value Rank of 45), which means that the stock price is rather high, it also demonstrates above-average growth (Obermatt Growth Rank of 61). This is a typical case, as high-growth companies are often expensive. Good financing practices (Obermatt Safety Rank of 53) are a double-edged sword: if the company continues growing, low debt limits shareholder returns. But if the company increases its debt, it will also increase risk. In other words, this is an investment on the safer side, despite the above-average price (low value). 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	n/a
Growth Rank	n/a
Safety Rank	n/a
Combined Rank	n/a

Country	Japan
Industry	Tobacco
Index	TOPIX 100, Human Rights, Low Waste, Recycling, Nikkei 225
Size class	XX-Large

This stock has achievements: Top 10 Stock.

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Research History: Japan Tobacco

RESEARCH HISTORY	2021	2022	2023	2024
VALUE
VALUE	93	71	44	n/a
GROWTH
GROWTH	67	77	37	n/a
SAFETY
SAFETY	57	38	45	n/a
SENTIMENT
SENTIMENT	n/a	47	56	^new
360° VIEW
360° VIEW	n/a	73	42	^new

Most recent update of the stock research: . Financial reporting date used for calculating ranks: . Stock research history is based on the Obermatt Method. The higher the rank, the better Japan Tobacco is in the corresponding investment strategy.
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Combined financial peformance in Detail

RESEARCH HISTORY	2021	2022	2023	2024
VALUE
VALUE	93	71	44	n/a
GROWTH
GROWTH	67	77	37	n/a
SAFETY
SAFETY	57	38	45	n/a
COMBINED
COMBINED	86	86	34	n/a

Last update of combined financial performance: . Stock analysis on combined financial performance: The higher the rank of Japan Tobacco the better the performance.

Value Metrics in Detail

ANALYSIS: With an Obermatt Value Rank of 45 (worse than 55% compared with alternatives), Japan Tobacco shares are more expensive than the average comparable stock. The Value Rank is based on consolidating four value indicators, with half of the indicators below and half above average for Japan Tobacco. Price-to-Profit (also referred to as price-earnings, P/E) is 62 which means that the stock price compared with what market professionals expect for future profits is lower than for 62% of comparable companies, indicating a good value concerning Japan Tobacco'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 21, which means that the stock price is lower as regards to invested capital than for 21% of comparable investments. On the other hand, Price-to-Sales is less favorable than 93% of alternatives (only 7% of peers have an even less favorable ratio). The same is valid for dividend yield, which is lower than 8% 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 45, is a hold recommendation based on Japan Tobacco'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)	58	19	3	n/a
PRICE VS. PROFITS (P/E)
PRICE VS. PROFITS (P/E)	96	87	62	n/a
PRICE VS. CAPITAL (Market-to-Book)
PRICE VS. CAPITAL (Market-to-Book)	86	38	22	n/a
DIVIDEND YIELD
DIVIDEND YIELD	96	100	94	n/a
CONSOLIDATED RANK: VALUE
CONSOLIDATED RANK: VALUE	93	71	44	n/a

Last update of Value Rank: . Stock analysis on value ratios: The higher the rank, the lower the value ratio of Japan Tobacco; 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), Japan Tobacco 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 Japan Tobacco. Capital Growth has a rank of 62, which means that currently professionals expect the company to grow its invested capital more than 31% of its competitors. Investors welcomed this, visible in the Stock Returns rank of 95 (above 95% of alternative investments). But Sales Growth has only a rank of 31, which means that, currently, professionals expect the company to grow less than 69% of its competitors, and Profit Growth is also low at a rank of 31. ...read more

RECOMMENDATION: The overall picture with a consolidated Growth Rank of 61, is a buy recommendation for growth and momentum investors. This is an ambiguous picture. Revenue growth and capital growth are strong, but the growth in profit, which seems good, can also be an indication that growth momentum may be negative. The fact that stock returns have been above average doesn't help much, as stock returns are less reliable in showing a company’s future growth potential. Prices may perform well for the simple reason that investors were too pessimistic in the past and are now correcting their opinions and moving the stock price to a more reasonable level. As the growth picture is mixed for Japan Tobacco, investors may want to look at value and sentiment indicators for a well-rounded picture of this stock. 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	28	26	31	n/a
PROFIT GROWTH
PROFIT GROWTH	23	52	31	n/a
CAPITAL GROWTH
CAPITAL GROWTH	n/a	67	39	n/a
STOCK RETURNS
STOCK RETURNS	70	95	85	n/a
CONSOLIDATED RANK: GROWTH
CONSOLIDATED RANK: GROWTH	67	77	37	n/a

Last update of Growth Rank: . Stock analysis on growth metrics: The higher the rank, the higher the growth and returns of Japan Tobacco.

Safety Metrics in Detail

ANALYSIS: With an Obermatt Safety Rank of 53 (better than 53% compared with alternatives), the company Japan Tobacco 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 Japan Tobacco 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, with two out of three indicators above average for Japan Tobacco. Leverage is at a rank of 58, meaning the company has a below-average debt-to-equity ratio. It has less debt than 58% of its competitors. Liquidity is also good at a rank of 55, meaning the company generates more profit to service its debt than 55% of its competitors. This indicates that the company is on the safer side when it comes to debt service. But Refinancing is lower at a rank of 35, which means that the portion of the debt that is about to be refinanced is above-average. It has more debt in the refinancing stage than 65% of its competitors. ...read more

RECOMMENDATION: With a consolidated Safety Rank of 53 (better than 53% compared with alternatives), Japan Tobacco has a financing structure that is safer than that of its competitors. The refinancing issues could be a short-term problem, especially if the company has reputation issues. Banks and investors don't like to refinance debt if there are clouds on the horizon. For this reason, investors should look at the refinancing environment for Japan Tobacco. Does it look safe that debt that is coming due can be covered with new debt? If that is the case, then the financing situation of the company is on the safer side. If not, it may be better to wait until refinancing has been completed and the Refinancing rank is good again. Investors may have a short-term debt challenge with Japan Tobacco and should also compare Obermatt’s Value, Growth, and Sentiment Ranks before making a decision. ...read more

SAFETY METRICS	2021	2022	2023	2024
LEVERAGE
LEVERAGE	40	52	58	n/a
REFINANCING
REFINANCING	66	39	33	n/a
LIQUIDITY
LIQUIDITY	61	44	55	n/a
CONSOLIDATED RANK: SAFETY
CONSOLIDATED RANK: SAFETY	57	38	45	n/a

Last update of Safety Rank: . Stock analysis on safety metrics: The higher the rank, the lower the leverage of Japan Tobacco 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	37	25	^new
OPINIONS CHANGE
OPINIONS CHANGE	n/a	58	59	^new
PRO HOLDINGS
PRO HOLDINGS	n/a	83	100	^new
MARKET PULSE
MARKET PULSE	n/a	15	44	^new
CONSOLIDATED RANK: SENTIMENT
CONSOLIDATED RANK: SENTIMENT	n/a	47	56	^new

Last update of Sentiment Rank: . Stock analysis on sentiment metrics: The higher the rank, the more positive the sentiment for Japan Tobacco.
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