Fact based stock research
Nitto Denko (TSE:6988)

JP3684000007

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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.

Nitto Denko stock research in summary

nitto.comjpja

ANALYSIS: With an Obermatt Combined Rank of 41 (worse than 59% compared with investment alternatives), Nitto Denko (Specialty Chemicals, Japan) shares have somewhat below-average financial characteristics compared with similar stocks. Shares of Nitto Denko are low in value (priced high) with a consolidated Value Rank of 27 (worse than 73% of alternatives) and show below-average growth (Growth Rank of 27) but are safely financed (Safety Rank of 97), which means low debt burdens. ...read more

RECOMMENDATION: A Combined Rank of 41, is a hold recommendation based on Nitto Denko's financial characteristics. As the company Nitto Denko's critical financial metrics exhibit below-average performance, such as low value (Obermatt Value Rank of 27) and low growth (Obermatt Growth Rank of 27), 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 97) 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	27
Growth Rank	27
Safety Rank	97
Combined Rank	41

Country	Japan
Industry	Specialty Chemicals
Index	Low Emissions, Nikkei 225
Size class	X-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: Nitto Denko

RESEARCH HISTORY	2021	2022	2023	2024
VALUE
VALUE	91	47	45	27
GROWTH
GROWTH	58	27	65	27
SAFETY
SAFETY	100	96	98	97
SENTIMENT
SENTIMENT	n/a	18	45	^new
360° VIEW
360° VIEW	n/a	41	69	^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 Nitto Denko is in the corresponding investment strategy.
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Combined financial peformance in Detail

RESEARCH HISTORY	2021	2022	2023	2024
VALUE
VALUE	91	47	45	27
GROWTH
GROWTH	58	27	65	27
SAFETY
SAFETY	100	96	98	97
COMBINED
COMBINED	93	72	86	41

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

Value Metrics in Detail

ANALYSIS: With an Obermatt Value Rank of 27 (worse than 73% compared with alternatives), Nitto Denko shares are more expensive than the average comparable stock. The Value Rank is based on consolidating four value indicators, with all four indicators below average for Nitto Denko. Price-to-Sales is 21 which means that the stock price compared with what market professionals expect for future profits is higher than 79% of comparable companies, indicating a low value concerning Nitto Denko's sales levels. Price-to-Book Capital (also referred to as market-to-book ratio) also has a low Price-to-Book Rank of 25, which means that both reliable company size indicators, sales, and invested capital cannot explain the high stock price of Nitto Denko. In addition, the two profit-related value indicators, Price-to-Profit (also referred to as price-earnings, P/E) with a low rank of 47 and Dividend Yield, which is lower than 58% of comparable companies, also make the stock more expensive compared with investment alternatives. ...read more

RECOMMENDATION: The overall picture with a consolidated Value Rank of 27, is a hold recommendation based on Nitto Denko's stock price compared with the company's operational size and dividend yields. How can market participants pay such a high price for Nitto Denko? One reason may be that the company is simply too popular. If enough people want a particular stock, its price can exceed reasonable levels. This is often the case for companies offering new and exciting products and everybody wants a piece of the action. Should you pay a lot for a hot stock such as Nitto Denko? It's risky, and even if the stock price continues to grow because of popular demand, it may return to more typical lower levels later. And that return can be sudden and quick, making it impossible for retail investors to exit on time. Sometimes, high prices are deserved. This is the case when it is justified to believe that the company will dominate a market with high profit margins. It has happened in the past for many technology companies and indeed for commercially successful pharmaceutical discoveries. Sometimes they last, sometimes, they get eaten alive. Nitto Denko may be such a type of stock. That would mean, retail investors should be careful, only considering investing a small part of their wealth in this exciting category and always being ready to lose more than half, if not all of the investment. 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 essential 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)	71	34	30	21
PRICE VS. PROFITS (P/E)
PRICE VS. PROFITS (P/E)	86	43	66	47
PRICE VS. CAPITAL (Market-to-Book)
PRICE VS. CAPITAL (Market-to-Book)	71	49	39	25
DIVIDEND YIELD
DIVIDEND YIELD	78	57	48	42
CONSOLIDATED RANK: VALUE
CONSOLIDATED RANK: VALUE	91	47	45	27

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

Growth Metrics in Detail

ANALYSIS: With an Obermatt Growth Rank of 27 (better than 27% compared with alternatives), Nitto Denko 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 Nitto Denko. Profit Growth has a rank of 63, which means that currently professionals expect the company to grow its profits more than 63% of its competitors. This is a good sign for shareholders, which is confirmed by an above-average Stock Returns rank of 87 (above 87% of alternative investments). But Sales Growth has a below the median rank of 19, which means that, currently, professionals expect the company to grow less than 81% of its competitors, and Capital Growth also has a lower rank of 7. ...read more

RECOMMENDATION: The overall picture with a consolidated Growth Rank of 27, 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 Nitto Denko. 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	36	21	32	19
PROFIT GROWTH
PROFIT GROWTH	50	33	53	63
CAPITAL GROWTH
CAPITAL GROWTH	n/a	74	71	7
STOCK RETURNS
STOCK RETURNS	49	37	85	87
CONSOLIDATED RANK: GROWTH
CONSOLIDATED RANK: GROWTH	58	27	65	27

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

Safety Metrics in Detail

ANALYSIS: With an Obermatt Safety Rank of 97 (better than 97% compared with alternatives) for 2024, the company Nitto Denko has safe financing practices, which means that their overall debt burden is low. This doesn't mean that the business of Nitto Denko 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 Nitto Denko. Leverage is at a rank of 100, meaning the company has a below-average debt-to-equity ratio. It has less debt than 100% of its competitors. Liquidity is also good at a rank of 91, meaning the company generates more profit to service its debt than 91% 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 47, 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 53% of its competitors. ...read more

RECOMMENDATION: With a consolidated Safety Rank of 97 (better than 97% compared with alternatives), Nitto Denko 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 Nitto Denko. 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 Nitto Denko 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	94	98	98	100
REFINANCING
REFINANCING	59	67	51	47
LIQUIDITY
LIQUIDITY	100	82	92	91
CONSOLIDATED RANK: SAFETY
CONSOLIDATED RANK: SAFETY	100	96	98	97

Last update of Safety Rank: 14-Nov-2024. Stock analysis on safety metrics: The higher the rank, the lower the leverage of Nitto Denko 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	20	17	^new
OPINIONS CHANGE
OPINIONS CHANGE	n/a	50	61	^new
PRO HOLDINGS
PRO HOLDINGS	n/a	39	78	^new
MARKET PULSE
MARKET PULSE	n/a	45	47	^new
CONSOLIDATED RANK: SENTIMENT
CONSOLIDATED RANK: SENTIMENT	n/a	18	45	^new

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