Fact based stock research
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.

(NEW) Sentiment - quantifies professional analyst ratings and holdings as well as market pulse. Green = positive sentiment; red = skepticism (Only available to Premium Subscribers).

(NEW) 360° View - the ultimate rating with all financial and non-financial indicators.

Japan Tobacco stock research in summary

jti.co.jp

ANALYSIS: With an Obermatt Combined Rank of 37 (worse than 63% compared with investment alternatives), Japan Tobacco (Tobacco, Japan) shares have somewhat below-average financial characteristics compared with similar stocks. Shares of Japan Tobacco are low in value (priced high) with a consolidated Value Rank of 47 (worse than 53% of alternatives) and show below-average growth (Growth Rank of 41) but are safely financed (Safety Rank of 53), which means low debt burdens. ...read more

RECOMMENDATION: A Combined Rank of 37, is a hold recommendation based on Japan Tobacco's financial characteristics. As the company Japan Tobacco's critical financial metrics exhibit below-average performance, such as low value (Obermatt Value Rank of 47) and low growth (Obermatt Growth Rank of 41), it is a somewhat questionable stock investment, where the risk of paying too much for the shares is significant, unless the company has an exceptionally bright future. In this case, good financing practices (Obermatt Safety Rank of 53) are a positive sign, because it may allow the company to weather challenging times until the hoped-for cash flows materialize. This may be true for high-tech or biotechnology companies with enough cash to sustain prolonged business development. If they own properties that only provide cash flows in the future, the stock may look excessively expensive and unattractive today. In such cases, the Obermatt Method has limited value, as it is based on facts we can observe today. If the facts lie all in the future, stock investing becomes guesswork, and this should only be a driver in a limited number of investments that account for a small fraction of a safe portfolio. 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	47
Growth Rank	41
Safety Rank	53
Combined Rank	37

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.

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: Japan Tobacco

RESEARCH HISTORY	2021	2022	2023	2024
VALUE
VALUE	93	71	44	47
GROWTH
GROWTH	67	77	37	41
SAFETY
SAFETY	57	38	45	53
SENTIMENT
SENTIMENT	n/a	47	56	^new
360° VIEW
360° VIEW	n/a	73	42	^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 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	47
GROWTH
GROWTH	67	77	37	41
SAFETY
SAFETY	57	38	45	53
COMBINED
COMBINED	86	86	34	37

Last update of combined financial performance: 14-Nov-2024. 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 47 (worse than 53% 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 57 which means that the stock price compared with what market professionals expect for future profits is lower than for 57% 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 23, which means that the stock price is lower as regards to invested capital than for 23% 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 4% 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 47, 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	7
PRICE VS. PROFITS (P/E)
PRICE VS. PROFITS (P/E)	96	87	62	57
PRICE VS. CAPITAL (Market-to-Book)
PRICE VS. CAPITAL (Market-to-Book)	86	38	22	23
DIVIDEND YIELD
DIVIDEND YIELD	96	100	94	96
CONSOLIDATED RANK: VALUE
CONSOLIDATED RANK: VALUE	93	71	44	47

Last update of Value Rank: 14-Nov-2024. 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 41 (better than 41% compared with alternatives), Japan Tobacco 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 Japan Tobacco. Sales Growth has a rank of 59 which means that currently professionals expect the company to grow more than 59% of its competitors. Stock Returns are also above average with a rank of 75. But Capital Growth has only a rank of 39, which means that currently professionals expect the company to grow its invested capital less than 61% of its competitors. Profit Growth is also low, with a rank of only 19, 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 41, 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 75% 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	28	26	31	59
PROFIT GROWTH
PROFIT GROWTH	23	52	31	19
CAPITAL GROWTH
CAPITAL GROWTH	n/a	67	39	39
STOCK RETURNS
STOCK RETURNS	70	95	85	75
CONSOLIDATED RANK: GROWTH
CONSOLIDATED RANK: GROWTH	67	77	37	41

Last update of Growth Rank: 14-Nov-2024. 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 56, meaning the company has a below-average debt-to-equity ratio. It has less debt than 56% 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	56
REFINANCING
REFINANCING	66	39	33	35
LIQUIDITY
LIQUIDITY	61	44	55	55
CONSOLIDATED RANK: SAFETY
CONSOLIDATED RANK: SAFETY	57	38	45	53

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