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Shin-Etsu Chemical (TSE:4063)

JP3371200001

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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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Shin-Etsu Chemical stock research in summary

shinetsu.co.jp

ANALYSIS: With an Obermatt Combined Rank of 43 (worse than 57% compared with investment alternatives), Shin-Etsu Chemical (Specialty Chemicals, Japan) shares have somewhat below-average financial characteristics compared with similar stocks. Shares of Shin-Etsu Chemical are low in value (priced high) with a consolidated Value Rank of 5 (worse than 95% of alternatives). But they show above-average growth (Growth Rank of 65) and are safely financed (Safety Rank of 81, which means below-average debt burdens). ...read more

RECOMMENDATION: A Combined Rank of 43, is a hold recommendation based on Shin-Etsu Chemical's financial characteristics. Investors looking for growth and low financial risk may find this stock attractive. While the company Shin-Etsu Chemical exhibits low value (Obermatt Value Rank of 5), which means that the stock price is rather high, it also demonstrates above-average growth (Obermatt Growth Rank of 65). This is a typical case, as high-growth companies are often expensive. Good financing practices (Obermatt Safety Rank of 81) 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). 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	5
Growth Rank	65
Safety Rank	81
Combined Rank	43

Country	Japan
Industry	Specialty Chemicals
Index	TOPIX 100, Low Emissions, Energy Efficient, Water Efficiency, 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.

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Research History: Shin-Etsu Chemical

RESEARCH HISTORY	2021	2022	2023	2024
VALUE
VALUE	45	15	9	5
GROWTH
GROWTH	52	69	81	65
SAFETY
SAFETY	95	92	80	81
SENTIMENT
SENTIMENT	n/a	65	78	^new
360° VIEW
360° VIEW	n/a	73	67	^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 Shin-Etsu Chemical is in the corresponding investment strategy.
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Combined financial peformance in Detail

RESEARCH HISTORY	2021	2022	2023	2024
VALUE
VALUE	45	15	9	5
GROWTH
GROWTH	52	69	81	65
SAFETY
SAFETY	95	92	80	81
COMBINED
COMBINED	77	70	56	43

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

Value Metrics in Detail

ANALYSIS: With an Obermatt Value Rank of 5 (worse than 95% compared with alternatives), Shin-Etsu Chemical shares are significantly more expensive than comparable stocks. The Value Rank is based on consolidating four value indicators, with all four indicators below average for Shin-Etsu Chemical. Price-to-Sales is 1 which means that the stock price compared with what market professionals expect for future profits is higher than 99% of comparable companies, indicating a low value concerning Shin-Etsu Chemical's sales levels. Price-to-Book Capital (also referred to as market-to-book ratio) also has a low Price-to-Book Rank of 7, which means that both reliable company size indicators, sales, and invested capital cannot explain the high stock price of Shin-Etsu Chemical. In addition, the two profit-related value indicators, Price-to-Profit (also referred to as price-earnings, P/E) with a low rank of 28 and Dividend Yield, which is lower than 73% 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 5, is a sell recommendation based on Shin-Etsu Chemical's stock price compared with the company's operational size and dividend yields. How can market participants pay such a high price for Shin-Etsu Chemical? 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 Shin-Etsu Chemical? 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. Shin-Etsu Chemical 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)	24	11	1	1
PRICE VS. PROFITS (P/E)
PRICE VS. PROFITS (P/E)	59	19	39	28
PRICE VS. CAPITAL (Market-to-Book)
PRICE VS. CAPITAL (Market-to-Book)	46	13	13	7
DIVIDEND YIELD
DIVIDEND YIELD	74	39	21	27
CONSOLIDATED RANK: VALUE
CONSOLIDATED RANK: VALUE	45	15	9	5

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

Growth Metrics in Detail

ANALYSIS: With an Obermatt Growth Rank of 65 (better than 65% compared with alternatives), Shin-Etsu Chemical shows an above-average growth dynamic in its industry. Investors also speak of positive momentum. The Growth Rank is based on consolidating four value indicators, with all but one indicator above average for Shin-Etsu Chemical. Sales Growth has a rank of 75 which means that currently, professionals expect the company to grow more than 75% of its competitors. Both Profit Growth, with a rank of 50, and Stock Returns, with a rank of 87, are also above average. But Capital Growth only has a rank of 23, which means that, currently, professionals expect the company to grow its invested capital less than 77% of its competitors. ...read more

RECOMMENDATION: The overall picture with a consolidated Growth Rank of 65, is a buy recommendation for growth and momentum investors. That may be a good sign if the company is already well positioned and doesn't require more investments at this time. They may focus on growing the top (revenues) and bottom (profits) lines, recently rewarded with above-average stock returns for shareholders. But it may also be a sign of danger as the company is falling back with capital investment activities concerning competition. This requires further analysis of corporate communications. 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. ...read more

GROWTH METRICS	2021	2022	2023	2024
REVENUE GROWTH
REVENUE GROWTH	44	64	83	75
PROFIT GROWTH
PROFIT GROWTH	73	58	38	50
CAPITAL GROWTH
CAPITAL GROWTH	n/a	83	37	23
STOCK RETURNS
STOCK RETURNS	48	37	97	87
CONSOLIDATED RANK: GROWTH
CONSOLIDATED RANK: GROWTH	52	69	81	65

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

Safety Metrics in Detail

ANALYSIS: With an Obermatt Safety Rank of 81 (better than 81% compared with alternatives) for 2024, the company Shin-Etsu Chemical has safe financing practices, which means that their overall debt burden is low. This doesn't mean that the business of Shin-Etsu Chemical 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 Shin-Etsu Chemical. Leverage is at a rank of 98, meaning the company has a below-average debt-to-equity ratio. It has less debt than 98% of its competitors. Liquidity is also good at a rank of 99, meaning the company generates more profit to service its debt than 99% 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 21, 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 79% of its competitors. ...read more

RECOMMENDATION: With a consolidated Safety Rank of 81 (better than 81% compared with alternatives), Shin-Etsu Chemical 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 Shin-Etsu Chemical. 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 Shin-Etsu Chemical 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	88	94	94	98
REFINANCING
REFINANCING	60	33	25	21
LIQUIDITY
LIQUIDITY	100	98	98	99
CONSOLIDATED RANK: SAFETY
CONSOLIDATED RANK: SAFETY	95	92	80	81

Last update of Safety Rank: 14-Nov-2024. Stock analysis on safety metrics: The higher the rank, the lower the leverage of Shin-Etsu Chemical 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	69	64	^new
OPINIONS CHANGE
OPINIONS CHANGE	n/a	87	55	^new
PRO HOLDINGS
PRO HOLDINGS	n/a	11	91	^new
MARKET PULSE
MARKET PULSE	n/a	36	43	^new
CONSOLIDATED RANK: SENTIMENT
CONSOLIDATED RANK: SENTIMENT	n/a	65	78	^new

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