February 1, 2024
Top 10 Stock Japan Tobacco 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: Japan Tobacco – Top 10 Stock in Nikkei 225 Index
Japan Tobacco is listed as a top 10 stock on February 01, 2024 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 is growing above average, but all other facts speak against a stock purchase, especially the low market sentiment by professional investors. Based on the Obermatt 360° View of 49 (49% performer), Obermatt assesses an overall hold recommendation for Japan Tobacco on February 01, 2024.
Snapshot: Obermatt Ranks
| Country | Japan |
| Industry | Tobacco |
| Index | TOPIX 100, Human Rights, Low Waste, Recycling, 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° View Japan Tobacco Hold
| 360 METRICS | February 1, 2024 | |||||||
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| VALUE | ||||||||
| VALUE | 42 |
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| GROWTH | ||||||||
| GROWTH | 55 |
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| SAFETY | ||||||||
| SAFETY | 43 |
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| SENTIMENT | ||||||||
| SENTIMENT | 49 |
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| 360° VIEW | ||||||||
| 360° VIEW | 49 |
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ANALYSIS: With an Obermatt 360° View of 49 (better than 49% compared with alternatives), overall professional sentiment and financial characteristics for the stock Japan Tobacco are below the industry average. The 360° View is based on consolidating four consolidated indicators, with three out of four indicators below average for Japan Tobacco. The consolidated Growth Rank has a good rank of 55, 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. It ranks higher than 55% of competitors in the same industry. The other indicators are below average, namely the Value, Safety, and Sentiment Ranks.The Value Rank at 42 means that the share price of Japan Tobacco is on the high side compared with its peers regarding revenues, profits, and invested capital. The stock price is higher than for 58% of alternative stocks in the same industry. The consolidated Safety Rank has a riskier rank of 43, which means that the company has a riskier financing structure than 57% comparable companies when looking at the amount of its debt, its refinancing requirements, and its ability to service debt. The consolidated Sentiment Rank also has a low rank of 49, indicating professional investors are more pessimistic about the stock than for 51% of alternative investment opportunities. ...read more
RECOMMENDATION: With a consolidated 360° View of 49, Japan Tobacco is worse than 51% of all alternative stock investment opportunities based on the Obermatt Method. As only one of the consolidated Obermatt Ranks exhibits excellent performance, namely the above-average growth (Growth Rank of 55), it is a riskier stock investment proposition. Aside from the critical professional market sentiment (Sentiment Rank of 49), the company is rather risky when it comes to financing (Safety Rank of 43). The negative market view on Japan Tobacco may be due to the high stock price (low value). A growth company like this may get too expensive at one point in time. If too many investors are desperate to join the party, they may drive stock prices above reasonable levels. While it is typical for growth companies to have low value, because investors are willing to pay more for companies that are expected to have high growth, the crucial question is: how much more do you pay for the stock of Japan Tobacco compared with alternatives? You can use the following rule of thumb: The value rank shouldn’t be lower than one minus the growth rank. For example, if the growth rank is at 75, and the value rank is at 5, you should tread carefully. If the value rank is at 40, it still might be a good value (even though it is lower than 50). As market sentiment is critical, you should be careful with paying more than market-average for this stock and conduct further research into the company's future growth potential. ...read more
Sentiment Strategy: Professional Market Sentiment for Japan Tobacco only reserved
ANALYSIS: With an Obermatt Sentiment Rank of 49 (better than 49% compared with alternatives), overall professional sentiment and engagement for the stock Japan Tobacco is below industry average. The Sentiment Rank is based on consolidating four sentiment indicators, with half the indicators below and the other half above average for Japan Tobacco. Analyst Opinions are at a rank of 24 (worse than 76% of alternative investments), which means that currently, stock research analysts tend to warn against investing in the stock of the company. Worse, Analyst Opinions Change has a rank of 41, which means that stock research experts are getting more pessimistic. It doesn't end with the analysts. Market Pulse is also low with a rank of 44, which means that the current professional news and professional social networks tend to be negative when discussing this company (more negative news than for 56% of competitors). On the upside, the Professional Investors rank is 96, which means that professional investors hold more stock in this company than in 96% of alternative investment opportunities. Pros tend to favor investing in this company. This could be due to a large company size, which could contribute to the higher share of professional investors in the company. If this is not the case, the low sentiment ranks are more challenging to explain. ...read more
RECOMMENDATION: With a consolidated Sentiment Rank of 49 (less encouraging than 51% compared with investment alternatives), Japan Tobacco has a reputation among professional investors that is below that of its competitors. Should the company be on the smaller side, the presence of professional investors could be reassuring. That would make Japan Tobacco stock something like a hidden gem. Investors should make sure with further research that this is true, because all other sentiment indicators are negative which is a sign for caution. ...read more
Value Strategy: Japan Tobacco Stock Price Value below-average critical
ANALYSIS: With an Obermatt Value Rank of 42 (worse than 58% compared with alternatives), Japan Tobacco 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 Japan Tobacco. Price-to-Profit (also referred to as price-earnings, P/E) is 62 which means that the stock price compared with what market professionals expect for future profits is lower than for 62% of comparable companies, indicating a good value concerning Japan Tobacco'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 22, which means that the stock price is lower as regards to invested capital than for 22% of comparable investments. On the other hand, Price-to-Sales is less favorable than 97% of alternatives (only 3% of peers have an even less favorable ratio). The same is valid for dividend yield, which is lower than 4% 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 42, is a hold recommendation based on Japan Tobacco'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. ...read more
Growth Strategy: Japan Tobacco Growth Momentum good
ANALYSIS: With an Obermatt Growth Rank of 55 (better than 55% compared with alternatives), Japan Tobacco 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 half of the indicators below and half above average for Japan Tobacco. Capital Growth has a rank of 56, which means that currently professionals expect the company to grow its invested capital more than 29% of its competitors. Investors welcomed this, visible in the Stock Returns rank of 91 (above 91% of alternative investments). But Sales Growth has only a rank of 40, which means that, currently, professionals expect the company to grow less than 60% of its competitors, and Profit Growth is also low at a rank of 29. ...read more
RECOMMENDATION: The overall picture with a consolidated Growth Rank of 55, 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 Japan Tobacco, investors may want to look at value and sentiment indicators for a well-rounded picture of this stock. ...read more
Safety Strategy: Japan Tobacco Debt Financing Safety below-average
| SAFETY METRICS | February 1, 2024 | |||||||
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| LEVERAGE | ||||||||
| LEVERAGE | 58 |
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| REFINANCING | ||||||||
| REFINANCING | 33 |
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| LIQUIDITY | ||||||||
| LIQUIDITY | 55 |
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| CONSOLIDATED RANK: SAFETY | ||||||||
| CONSOLIDATED RANK: SAFETY | 43 |
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ANALYSIS: With an Obermatt Safety Rank of 43 (better than 43% compared with alternatives), the company Japan Tobacco 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 Japan Tobacco 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 two out of three indicators above average for Japan Tobacco. Leverage is at a rank of 58, meaning the company has a below-average debt-to-equity ratio. It has less debt than 58% of its competitors. Liquidity is also good at a rank of 55, meaning the company generates more profit to service its debt than 55% 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 33, 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 67% of its competitors. ...read more
RECOMMENDATION: With a consolidated Safety Rank of 43 (worse than 57% compared with alternatives), Japan Tobacco has a financing structure that is riskier 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 Japan Tobacco. 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: Japan Tobacco Below-Average Financial Performance
| COMBINED PERFORMANCE | February 1, 2024 | |||||||
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| VALUE | ||||||||
| VALUE | 42 |
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| GROWTH | ||||||||
| GROWTH | 55 |
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| SAFETY | ||||||||
| SAFETY | 55 |
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| COMBINED | ||||||||
| COMBINED | 40 |
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ANALYSIS: With an Obermatt Combined Rank of 40 (worse than 60% compared with investment alternatives), Japan Tobacco (Tobacco, Japan) shares have somewhat below-average financial characteristics compared with similar stocks. Shares of Japan Tobacco are low in value (priced high) with a consolidated Value Rank of 42 (worse than 58% of alternatives), and are riskily financed (Safety Rank of 43, which means above-average debt burdens) but show above-average growth (Growth Rank of 55). ...read more
RECOMMENDATION: A Combined Rank of 40, is a hold recommendation based on Japan Tobacco's financial characteristics. As the company Japan Tobacco shows low value with an Obermatt Value Rank of 42 (58% of comparable investments are less expensive), investors should look at the other ranks. In this case, growth is expected to be above-average, better than 55% of comparable companies (Obermatt Growth Rank is 55). This is a typical case. Companies with above average growth tend to cost more than stocks with slower growth expectations. If this is a high-growth company, the low Obermatt Safety Rank of 43 is a good sign. The more debt a well-performing company has, the higher the returns to shareholders. However, if growth turns negative or interest rates increase, high debt may become a burden. If you believe the future is bright for Japan Tobacco, even a low-value company (in terms of its key financial indicators) can be a good investment. ...read more
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