June 1, 2023
Top 10 Stock KDDI Strong Buy Recommendation
How to read the ranks
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.
Snapshot: KDDI – Top 10 Stock in Tokyo Stock Exchange TOPIX 100
KDDI is listed as a top 10 stock on June 01, 2023 in the market index TOPIX 100 because of its high performance in at least one of the Obermatt investment strategies. Three consolidated Obermatt Ranks are above-average. Only the Value Rank is below average. The investment rationale may be an investment in future growth, supported by professional market opinion. Based on the Obermatt 360° View of 86 (top 86% performer), Obermatt assesses an overall strong buy recommendation for KDDI on June 01, 2023.
Snapshot: Obermatt Ranks
| Country | Japan |
| Industry | Wireless Telecommunication |
| Index | TOPIX 100, Telecommunications, Nikkei 225 |
| Size class | XX-Large |
When Obermatt identifies the Top 10 stocks in a market, it’s based on a certain investment strategy. The best performing stocks usually aren’t the ones that everyone is talking about (those are often "over-priced" and have low Value ranks).
For each investment strategy, we provide you with more detailed analysis and our recommendation. You see the ranks of the top 10 stocks ranked by that particular investment strategy (360° View, Sentiment, Value, Growth, Safety and Combined Financial Performance).
360° View: Obermatt 360° Assessment KDDI Strong Buy
| 360 METRICS | June 1, 2023 | |||||||
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| VALUE | ||||||||
| VALUE | 31 |
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| GROWTH | ||||||||
| GROWTH | 79 |
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| SAFETY | ||||||||
| SAFETY | 76 |
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| SENTIMENT | ||||||||
| SENTIMENT | 68 |
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| 360° VIEW | ||||||||
| 360° VIEW | 86 |
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ANALYSIS: With an Obermatt 360° View of 86 (better than 86% compared with alternatives) for 2023, overall professional sentiment and engagement for the stock KDDI are very positive. The 360° View is based on consolidating four consolidated indicators, with all but one indicator above average for KDDI. The consolidated Growth Rank has a good rank of 79, which means that the company experiences above-average growth momentum when looking at financial metrics such as revenue, profit, and invested capital growth, as well as stock returns. This means that growth is higher than for 79% of competitors in the same industry. The consolidated Safety Rank at 76 means that the company has a financing structure that is safer than 76 comparable companies when looking at the amount of its debt, its refinancing requirements, and its ability to service debt. Finally, the consolidated Sentiment Rank has a good rank of 68, which means that professional investors are more optimistic about the stock than for 68% of alternative investment opportunities. But the consolidated Value Rank is less desirable at 31, meaning that the share price of KDDI is on the higher side compared with indicators such as revenues, profits, and invested capital. This means the stock price is higher than for 69% of alternative stocks in the same industry. ...read more
RECOMMENDATION: With a 360° View of 86, KDDI is better than 86% of all alternative stock investment opportunities based on the Obermatt Method. As three out of four consolidated Obermatt Ranks exhibit excellent performance, such as above-average growth (Growth Rank of 79), a safe financing structure (Safety Rank of 76), and positive professional market sentiment (Sentiment Rank of 68), it is a solid stock investment where growth may be the strongest driver of the investment rationale, also reflected by institutional investors. It is typical for growth companies to have low value, as is the case here. Investors are willing to pay more for companies that outperform their competitors. So the question is, how much more do you pay for the stock of KDDI compared with alternatives? You can use the following rule of dumb: The growth rank reflects where the growth momentum of the company is (79% better than peers). The value rank could be the reverse reflection of that (21%). A Value Rank below that level may be assessed as expensive, a rank above that is still good value. Sometimes market sentiment just extrapolates the past, but sometimes they are right. You pay more than the market average for this stock, but it may be worth it. ...read more
Sentiment Strategy: Professional Market Sentiment for KDDI positive
ANALYSIS: With an Obermatt Sentiment Rank of 68 (better than 68% compared with alternatives), overall professional sentiment and engagement for the stock KDDI is above average. The Sentiment Rank is based on consolidating four sentiment indicators, with half of the metrics below and half above average for KDDI. Analyst Opinions are at a rank of 41 (worse than 59% of alternative investments), which means that currently, stock research analysts tend to warn against investing in the stock of the company. But they are changing their opinions! Analyst Opinions Change has a rank of 50, which means that stock research experts are more positive in their investment recommendations in the company. In other words, they are getting more optimistic of stock investments in KDDI. More encouragingly, the Professional Investors rank is 88, which means that professional investors hold more stock in this company than in 88% of alternative investment opportunities. Pros tend to favor investing in this company. But Market Pulse is on the lower side with a rank of 34, which means that the current professional news and professional social networks are on the negative side when discussing this company (more negative news than for 66% of competitors). ...read more
RECOMMENDATION: With an Obermatt Sentiment Rank of 68 (more positive than 68% compared with investment alternatives), KDDI has a reputation among professional investors that is above-average compared with that of its competitors. The sentiment signals are mixed for KDDI. While analysts and the news channels are negative, there is a change in what stock research analysts think. Above-average institutional investors in this company support them. While the sentiment signals remain mixed with analysts and news channels pessimistic, some analysts are optimistic, which is an encouraging sign for investing in this stock. ...read more
Value Strategy: KDDI Stock Price Value below-average critical
ANALYSIS: With an Obermatt Value Rank of 31 (worse than 69% compared with alternatives), KDDI shares are more expensive than the average comparable stock. The Value Rank is based on consolidating four value indicators, with three out of four indicators below average for KDDI. Only Price-to-Profit (also referred to as price-earnings, P/E) indicates good stock value with a rank of 52, which means that the stock price compared with what market professionals expect for future profits is lower than for 52% of comparable companies, indicating a good value concerning KDDI's profit levels. But Price-to-Sales is 34 which means that the stock price compared with what market professionals expect for future profits is higher than for 66% of comparable companies, indicating a low value concerning KDDI'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 30 and for dividend yield, which is lower than for 54% of comparable companies, making the stock more expensive compared with the company's expected dividend payouts. ...read more
RECOMMENDATION: The overall picture with a consolidated Value Rank of 31, is a HOLD recommendation based on KDDI's stock price compared with the company's operational size and dividend yields. Can we rely on only one good value indicator? Only if we know the company well. In this case, a high Price-to-Profit Rank, while Price-to-Sales and Price-to-Book are both below the market typical levels, means that the company can charge higher prices for its products and needs less capital to produce them. If this is sustainable, then KDDI is a good investment because profits count most in enterprise valuations. The low dividend yield indicates that the company is confident it can do something with the generated cash that is more valuable than paying the profits out to the shareholders in the form of dividends. ...read more
Growth Strategy: KDDI Growth Momentum high
ANALYSIS: With an Obermatt Growth Rank of 79 (better than 79% compared with alternatives) for 2023, KDDI shows one of the highest growth dynamics in its industry. Investors also speak of high momentum. The Growth Rank is based on consolidating four value indicators, with half of the indicators below and half above average for KDDI. Capital Growth has a rank of 67, which means that currently professionals expect the company to grow its invested capital more than 45% of its competitors. Investors welcomed this, visible in the Stock Returns rank of 65 (above 65% of alternative investments). But Sales Growth has only a rank of 49, which means that, currently, professionals expect the company to grow less than 51% of its competitors, and Profit Growth is also low at a rank of 45. ...read more
RECOMMENDATION: The overall picture with a consolidated Growth Rank of 79, 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 KDDI, investors may want to look at value and sentiment indicators for a well-rounded picture of this stock. ...read more
Safety Strategy: KDDI Debt Financing Safety very solid
| SAFETY METRICS | June 1, 2023 | |||||||
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| LEVERAGE | ||||||||
| LEVERAGE | 71 |
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| REFINANCING | ||||||||
| REFINANCING | 15 |
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| LIQUIDITY | ||||||||
| LIQUIDITY | 97 |
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| CONSOLIDATED RANK: SAFETY | ||||||||
| CONSOLIDATED RANK: SAFETY | 76 |
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ANALYSIS: With an Obermatt Safety Rank of 76 (better than 76% compared with alternatives) for 2023, the company KDDI has safe financing practices, which means that their overall debt burden is low. This doesn't mean that the business of KDDI 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 KDDI. Leverage is at a rank of 71, meaning the company has a below-average debt-to-equity ratio. It has less debt than 71% of its competitors. Liquidity is also good at a rank of 97, meaning the company generates more profit to service its debt than 97% 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 15, 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 85% of its competitors. ...read more
RECOMMENDATION: With an Obermatt Safety Rank of 76 (better than 76% compared with alternatives), KDDI has a financing structure that is significantly 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 KDDI. 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. ...read more
Combined financial peformance: KDDI Top Financial Performance
| COMBINED PERFORMANCE | June 1, 2023 | |||||||
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| VALUE | ||||||||
| VALUE | 31 |
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| GROWTH | ||||||||
| GROWTH | 79 |
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| SAFETY | ||||||||
| SAFETY | 97 |
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| COMBINED | ||||||||
| COMBINED | 84 |
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ANALYSIS: With an Obermatt Combined Rank of 84 (better than 84% compared with investment alternatives), KDDI (Wireless Telecommunication, Japan) shares have much better financial characteristics than comparable stocks. Shares of KDDI are low in value (priced high) with a consolidated Obermatt Value Rank of 31 (worse than 69% of alternatives). But they show above-average growth (Growth Rank of 79) and are safely financed (Safety Rank of 76, which means below-average debt burdens). ...read more
RECOMMENDATION: An Obermatt Combined Rank of 84, is a strong buy recommendation based on KDDI's financial characteristics. Investors looking for growth and low financial risk may find this stock attractive. While the company KDDI exhibits low value (Obermatt Value Rank of 31), which means that the stock price is rather high, it also demonstrates above-average growth (Obermatt Growth Rank of 79). This is a typical case, as high-growth companies are often expensive. Good financing practices (Obermatt Safety Rank of 76) 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). ...read more
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