Fact based stock research
Nippon Gas (TSE:8174)

JP3695600001

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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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Nippon Gas stock research in summary

nichigas.co.jp

ANALYSIS: With an Obermatt Combined Rank of 54 (better than 54% compared with investment alternatives), Nippon Gas (Gas Utilities, Japan) shares have above-average financial characteristics compared with similar stocks. Shares of Nippon Gas 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 49) but are safely financed (Safety Rank of 52), which means low debt burdens. ...read more

RECOMMENDATION: A Combined Rank of 54, is a buy recommendation based on Nippon Gas's financial characteristics. As the company Nippon Gas's critical financial metrics exhibit below-average performance, such as low value (Obermatt Value Rank of 47) and low growth (Obermatt Growth Rank of 49), 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 52) 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	49
Safety Rank	52
Combined Rank	54

Country	Japan
Industry	Gas Utilities
Index
Size class	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: Nippon Gas

RESEARCH HISTORY	2021	2022	2023	2024
VALUE
VALUE	77	51	37	47
GROWTH
GROWTH	22	41	37	49
SAFETY
SAFETY	60	41	67	52
SENTIMENT
SENTIMENT	n/a	64	93	^new
360° VIEW
360° VIEW	n/a	54	75	^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 Nippon Gas is in the corresponding investment strategy.
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Combined financial peformance in Detail

RESEARCH HISTORY	2021	2022	2023	2024
VALUE
VALUE	77	51	37	47
GROWTH
GROWTH	22	41	37	49
SAFETY
SAFETY	60	41	67	52
COMBINED
COMBINED	62	39	42	54

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

Value Metrics in Detail

ANALYSIS: With an Obermatt Value Rank of 47 (worse than 53% compared with alternatives), Nippon Gas 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 Nippon Gas. Price-to-Profit (also referred to as price-earnings, P/E) is 58 which means that the stock price compared with what market professionals expect for future profits is lower than for 58% of comparable companies, indicating a good value concerning Nippon Gas'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 17, which means that the stock price is lower as regards to invested capital than for 17% of comparable investments. On the other hand, Price-to-Sales is less favorable than 71% of alternatives (only 29% of peers have an even less favorable ratio). The same is valid for dividend yield, which is lower than 12% 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 Nippon Gas'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)	69	31	27	29
PRICE VS. PROFITS (P/E)
PRICE VS. PROFITS (P/E)	61	60	46	58
PRICE VS. CAPITAL (Market-to-Book)
PRICE VS. CAPITAL (Market-to-Book)	45	27	15	17
DIVIDEND YIELD
DIVIDEND YIELD	79	74	72	88
CONSOLIDATED RANK: VALUE
CONSOLIDATED RANK: VALUE	77	51	37	47

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

Growth Metrics in Detail

ANALYSIS: With an Obermatt Growth Rank of 49 (better than 49% compared with alternatives), Nippon Gas 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 three out of four metrics below average for Nippon Gas. While Profit Growth has a good rank of 77, as professionals currently expect the company to grow its profits more than 77% of its competitors, all other growth indicators are below market averages. Sales Growth has a rank of 49, which means that currently professionals expect the company to grow less than 51% of its competitors, while Capital Growth has a rank of 29 and Stock Returns have been below market median, with a rank of 19 (81% of alternative investments were better). ...read more

RECOMMENDATION: The overall picture with a consolidated Growth Rank of 49, is a hold recommendation for growth and momentum investors. While revenue growth and capital growth are good growth momentum indicators, profit is less reliable, because profits may increase due to cost-cutting measures which typically indicate negative growth momentum. "You can save a dollar only once" is the saying about such situations. Growth Investors should look at company priorities closely if they are interested in growth, because the increase in profits is not usually an indicator of growth, and stock prices have been below market, too. 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 limited here. ...read more

GROWTH METRICS	2021	2022	2023	2024
REVENUE GROWTH
REVENUE GROWTH	39	52	56	49
PROFIT GROWTH
PROFIT GROWTH	32	57	32	77
CAPITAL GROWTH
CAPITAL GROWTH	n/a	13	51	29
STOCK RETURNS
STOCK RETURNS	17	51	53	19
CONSOLIDATED RANK: GROWTH
CONSOLIDATED RANK: GROWTH	22	41	37	49

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

Safety Metrics in Detail

ANALYSIS: With an Obermatt Safety Rank of 52 (better than 52% compared with alternatives), the company Nippon Gas 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 Nippon Gas 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 just one indicator above average for Nippon Gas. Liquidity is at 84, meaning the company generates more profit to service its debt than 84% of its competitors. This indicates that the company is safer when it comes to debt service. But Refinancing is riskier at a rank of 32, 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 68% of its competitors. Leverage is also high at a rank of 45, which means that the company has an above-average debt-to-equity ratio. It has more debt than 55% of its competitors. ...read more

RECOMMENDATION: With a consolidated Safety Rank of 52 (better than 52% compared with alternatives), Nippon Gas has a financing structure that is safer 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. If the company is sailing with good winds, as may be visible from the Growth and Sentiment performance, the refinancing risk may be lower than the low Refinancing rank suggests. ...read more

SAFETY METRICS	2021	2022	2023	2024
LEVERAGE
LEVERAGE	57	48	56	45
REFINANCING
REFINANCING	53	22	38	32
LIQUIDITY
LIQUIDITY	64	72	84	84
CONSOLIDATED RANK: SAFETY
CONSOLIDATED RANK: SAFETY	60	41	67	52

Last update of Safety Rank: 14-Nov-2024. Stock analysis on safety metrics: The higher the rank, the lower the leverage of Nippon Gas 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	83	95	^new
OPINIONS CHANGE
OPINIONS CHANGE	n/a	87	50	^new
PRO HOLDINGS
PRO HOLDINGS	n/a	12	69	^new
MARKET PULSE
MARKET PULSE	n/a	30	68	^new
CONSOLIDATED RANK: SENTIMENT
CONSOLIDATED RANK: SENTIMENT	n/a	64	93	^new

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