June 22, 2023
Top 10 Stock Nichirei Hold 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: Nichirei – Top 10 Stock in Nikkei 225 Index
Nichirei is listed as a top 10 stock on June 22, 2023 in the market index Nikkei 225 because of its high performance in at least one of the Obermatt investment strategies. Only one consolidated Obermatt Rank is above-average. The company enjoys a positive professional investor sentiment, but all financial facts speak against a stock purchase. This is probably an investment into the future. Based on the Obermatt 360° View of 38 (38% performer), Obermatt assesses an overall hold recommendation for Nichirei on June 22, 2023.
Snapshot: Obermatt Ranks
| Country | Japan |
| Industry | Packaged Foods & Meats |
| Index | Nikkei 225 |
| Size class | X-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° View Nichirei Hold
| 360 METRICS | June 22, 2023 | |||||||
|---|---|---|---|---|---|---|---|---|
| VALUE | ||||||||
| VALUE | 43 |
|
||||||
| GROWTH | ||||||||
| GROWTH | 39 |
|
||||||
| SAFETY | ||||||||
| SAFETY | 38 |
|
||||||
| SENTIMENT | ||||||||
| SENTIMENT | 89 |
|
||||||
| 360° VIEW | ||||||||
| 360° VIEW | 38 |
|
||||||
ANALYSIS: With an Obermatt 360° View of 38 (better than 38% compared with alternatives), overall professional sentiment and financial characteristics for the stock Nichirei are below the industry average. The 360° View is based on consolidating four consolidated indicators, with three out of four indicators below average for Nichirei. The consolidated Sentiment Rank has a good rank of 89, which means that professional investors are more optimistic about the stock than for 89% of alternative investment opportunities. But all other ranks are below average. The consolidated Value Rank has a rank of 43, which means that the share price of Nichirei is on the higher side compared with typical size in indicators such as revenues, profits, and invested capital. The consolidated Growth Rank also has a low rank of 39, meaning that the company exhibits below-average growth momentum when looking at financial metrics such as revenue, profit, invested capital growth, and stock returns. This means that growth is lower than for 39% of competitors in the same industry. Finally, the consolidated Safety Rank has a riskier rank of 38 which means that the company has a riskier financing structure than 62% comparable companies when looking at the amount of its debt, its refinancing requirements, and its ability to service debt. ...read more
RECOMMENDATION: With a 360° View of 38, Nichirei is worse than 62% of all alternative stock investment opportunities based on the Obermatt Method. As only the professional market sentiment (Sentiment Rank of 89) is above-average, and all other consolidated Obermatt Ranks are below peers, the stock investing proposition case is rather weak. The stock price is expensive for a company of this size in this industry, visible in the below-average Value Rank. Growth is below the competition based on the Growth Rank, and the company has more debt than other companies, according to the Safety Rank. So the question becomes: How important is the Sentiment Rank when all others are below average? When it comes to growth, the low rating might be justified if growth is expected in the future and not yet reflected in current performance. This is often the case for companies with intellectual property, such as technology and pharmaceutical companies. In the early phases, these companies are expensive compared with their size and may have a lot of debt on their books, as is the case here, as seen in the low Value and Safety Ranks. Future growth may be the strongest investment rationale in this case, which is only reflected by institutional investors' opinions. You pay more than the market average for this stock and invest in a rather debt-loaded enterprise, but it may be worth it if the future of Nichireị is bright. A small investment might be justified, but proceed with caution. ...read more
Sentiment Strategy: Professional Market Sentiment for Nichirei very positive
ANALYSIS: With an Obermatt Sentiment Rank of 89 (better than 89% compared with alternatives) for 2023, overall professional sentiment and engagement for the stock Nichirei is very positive. The Sentiment Rank is based on consolidating four sentiment indicators, with all four indicators above average for Nichirei. Analyst Opinions are at a rank of 64 (better than 64% of alternative investments), which means that, currently, stock research analysts tend to recommend a stock investment in the company. Analyst Opinions Change is also positive with a rank of 62, which means that stock research experts are changing their opinions for the better and recommending investing in the company. They are getting more optimistic about stock investments in Nichirei. The Professional Investors rank is 87, which means that currently, professional investors hold more stock in this company than in 87% of alternative investment opportunities. Pros tend to favor investing in this company. Finally, Market Pulse has a rank of 73 which means that the current professional news and professional social networks are on the positive side when discussing this company (more positive news than for 73% of competitors). ...read more
RECOMMENDATION: With an Obermatt Sentiment Rank of 89 (more positive than 89% compared with investment alternatives), Nichirei has a reputation among professional investors that is significantly higher than that of its competitors. Since all market sentiment indicators are positive, the professional community highly recommends investment in the company. Does this mean Nichirei stocks are a safe investment? Far from it. Even professionals make mistakes. Especially in stock investing, there is a tendency to follow the leaders. Since trees don't grow to the heavens, such positive sentiment may also be interpreted as a danger sign. A lot of optimism can often be a sign of troubles to come, albeit unforeseen by most. ...read more
Value Strategy: Nichirei Stock Price Value below-average critical
ANALYSIS: With an Obermatt Value Rank of 43 (worse than 57% compared with alternatives), Nichirei shares are more expensive than the average comparable stock. The Value Rank is based on consolidating four value indicators, where half the indicators are below and half above average for Nichirei. Price-to-Sales (P/S) is 56, which means that the stock price compared with what market professionals expect for future sales is lower than for 56% of comparable companies, indicating a good value concerning Nichirei's revenue size. The same is valid for dividend yields with a Dividend Yield rank of 54, which means that dividends are expected to be higher than for 54% of comparable investments. On the other hand, the Price-to-Book Capital ratio (also referred to as market-to-book ratio) is less favorable than for 77% of alternatives (only 23% of peers have an even higher ratio). The same is valid for the Price-to-Profit (or Price / Earnings, P/E) ratio, which is higher than for 53% of comparable companies, making the stock more expensive compared with the company's expected profit levels. ...read more
RECOMMENDATION: The overall picture with a consolidated Value Rank of 43, is a HOLD recommendation based on Nichirei's stock price compared with the company's operational size and dividend yields. This is a somewhat surprising picture, because it means that profits are low while dividends are high. One interpretation could be that profits are expected to increase, justifying the high dividend payments. But it could also mean that the company desperately keeps the high dividends to avoid a collapsing share price. This would be a rather dangerous constellation. ...read more
Growth Strategy: Nichirei Growth Momentum low
ANALYSIS: With an Obermatt Growth Rank of 39 (better than 39% compared with alternatives), Nichirei 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 Nichirei. Profit Growth has a rank of 50, which means that currently professionals expect the company to grow its profits more than 50% of its competitors. This is a good sign for shareholders, which is confirmed by an above-average Stock Returns rank of 89 (above 89% of alternative investments). But Sales Growth has a below the median rank of 44, which means that, currently, professionals expect the company to grow less than 56% of its competitors, and Capital Growth also has a lower rank of 6. ...read more
RECOMMENDATION: The overall picture with a consolidated Value Rank of 39, is a HOLD recommendation for growth and momentum investors. Because revenues and invested capital are the more solid growth indicators, the positive development on the profit side is less relevant. It may have been caused by cost-cutting, which may be a negative growth indicator. Finally, the above-average stock returns recently are a thing of the past and not a good indicator of future returns. Investors should be confident that the cost-cutting initiative leading to higher profits is to benefit the company's future. If not, there is little growth momentum, and investment is only advisable if the Value Ranks suggest a good investment timing for Nichirei. ...read more
Safety Strategy: Nichirei Debt Financing Safety below-average
| SAFETY METRICS | June 22, 2023 | |||||||
|---|---|---|---|---|---|---|---|---|
| LEVERAGE | ||||||||
| LEVERAGE | 36 |
|
||||||
| REFINANCING | ||||||||
| REFINANCING | 31 |
|
||||||
| LIQUIDITY | ||||||||
| LIQUIDITY | 71 |
|
||||||
| CONSOLIDATED RANK: SAFETY | ||||||||
| CONSOLIDATED RANK: SAFETY | 38 |
|
||||||
ANALYSIS: With an Obermatt Safety Rank of 38 (better than 38% compared with alternatives), the company Nichirei has financing practices on the riskier side, which means that their overall debt burden is above the industry average. This doesn't mean that the business of Nichirei 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 just one indicator above average for Nichirei. Liquidity is at 71, meaning the company generates more profit to service its debt than 71% of its competitors. This indicates that the company is safer when it comes to debt service. But Refinancing is riskier at a rank of 31, 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 69% of its competitors. Leverage is also high at a rank of 36, which means that the company has an above-average debt-to-equity ratio. It has more debt than 64% of its competitors. ...read more
RECOMMENDATION: With an Obermatt Safety Rank of 38 (worse than 62% compared with alternatives), Nichirei has a financing structure that is riskier than that of its competitors. High Leverage (a low Obermatt Leverage Rank) is good in good times, because it usually indicates that shareholders get higher returns. The good Liquidity performance of the company is an indicator that this is the case. However, if you expect an economic downturn, you may stay clear of this stock because they have an above-average debt level that needs refinancing soon. ...read more
Combined financial peformance: Nichirei Lowest Financial Performance
| COMBINED PERFORMANCE | June 22, 2023 | |||||||
|---|---|---|---|---|---|---|---|---|
| VALUE | ||||||||
| VALUE | 43 |
|
||||||
| GROWTH | ||||||||
| GROWTH | 39 |
|
||||||
| SAFETY | ||||||||
| SAFETY | 71 |
|
||||||
| COMBINED | ||||||||
| COMBINED | 14 |
|
||||||
ANALYSIS: With an Obermatt Combined Rank of 14 (worse than 86% compared with investment alternatives), Nichirei (Packaged Foods & Meats, Japan) shares have lower financial characteristics compared with similar stocks. Shares of Nichirei are low in value (priced high) with a consolidated Obermatt Value Rank of 43 (worse than 57% of alternatives), show below-average growth (Growth Rank of 39), and are riskily financed (Safety Rank of 38), which means above-average debt burdens. ...read more
RECOMMENDATION: An Obermatt Combined Rank of 14, is a sell recommendation based on Nichirei's financial characteristics. As the company Nichirei's key financial metrics all exhibit below-average performance, such as low value (Obermatt Value Rank of 43), low growth (Obermatt Growth Rank of 39), and risky financing practices (Obermatt Safety Rank of 38), 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. Such poor financial performance sometimes indicates that the company's business is all concentrated in some distant future. This is sometimes the case for high-tech or biotechnology companies. If they own properties that only provide cash flows in the future, the stock may look excessively expensive and risky today. In such cases, the Obermatt Method has limited value as it is based on facts we can observe today. If the facts are all in the future, stock investing becomes guesswork, and this should only be a driver in a limited number of investments that should only amount to a small fraction of a safe portfolio. ...read more
Obermatt Portfolio Performance
We’re so convinced about our research, that we buy our stock tips.
See the performance of the Obermatt portfolio.