June 1, 2023
Top 10 Stock Nippon Steel Strong Buy 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: Nippon Steel – Top 10 Stock in Tokyo Stock Exchange TOPIX 100
Nippon Steel is listed as a top 10 stock on June 01, 2023 in the market index TOPIX 100 because of its high performance in at least one of the Obermatt investment strategies. As three out of four consolidated Obermatt Ranks exhibit excellent performance, it is a solid investment where the risk of paying too much for the shares is low, despite a currently slow growth momentum. Based on the Obermatt 360° View of 76 (top 76% performer), Obermatt assesses an overall strong buy recommendation for Nippon Steel on June 01, 2023.
Snapshot: Obermatt Ranks
| Country | Japan |
| Industry | Steel |
| Index | TOPIX 100, Low Emissions, Energy Efficient, 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° Assessment Nippon Steel Strong Buy
| 360 METRICS | June 1, 2023 | |||||||
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| VALUE | ||||||||
| VALUE | 92 |
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| GROWTH | ||||||||
| GROWTH | 41 |
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| SAFETY | ||||||||
| SAFETY | 72 |
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| SENTIMENT | ||||||||
| SENTIMENT | 53 |
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| 360° VIEW | ||||||||
| 360° VIEW | 76 |
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ANALYSIS: With an Obermatt 360° View of 76 (better than 76% compared with alternatives) for 2023, overall professional sentiment and engagement for the stock Nippon Steel are very positive. The 360° View is based on consolidating four consolidated indicators, with half of the indicators below and half above average for Nippon Steel. The consolidated Value Rank has an attractive rank of 92, which means that the share price of Nippon Steel is on the lower side compared with typical size in indicators such as revenues, profits, and invested capital. This means the stock price is lower than for 92% of alternative stocks in the same industry. The company is also safely financed with a Safety rank of 72. In addition, professional market sentiment is above average compared with other stock investment alternatives with a Sentiment Rank of 53. But the consolidated Growth Rank has a low rank of 41, which means that the company is below average in terms of growth, and momentum when looking at financial metrics such as revenue, profit, and invested capital growth as well as stock returns. 59 of its competitors have better growth. ...read more
RECOMMENDATION: With a 360° View of 76, Nippon Steel is better than 76% of all alternative stock investment opportunities based on the Obermatt Method. Three out of four consolidated Obermatt Ranks show above-average performance. The stock has as good value (Value Rank of 92), secure financing practices (Safety Rank of 72), and positive market sentiment in the professional investor community (Sentiment Rank of 53). It is a solid stock investment where the risk of paying too much for the shares is limited, and disappointments are less likely to occur. The company growth expectations are below the industry average (Growth Rank of 41), but that could also be temporary since professional investors remain optimistic despite the low growth numbers. The low price as reflected in the good value ranking can sometimes indicate that the company's future is challenging. The below-par growth performance may be the reason for this. Companies that grow less are typically cheaper than fast-growing competitors. We recommend evaluating whether the future of Nippon Steel is as difficult as the stock’s low price suggests, despite the positive professional investor sentiment. Since the professional community is optimistic, you might have less to worry about, and the stock may just go through a more challenging phase now, indicating good timing. ...read more
Sentiment Strategy: Professional Market Sentiment for Nippon Steel positive
ANALYSIS: With an Obermatt Sentiment Rank of 53 (better than 53% compared with alternatives), overall professional sentiment and engagement for the stock Nippon Steel is above average. The Sentiment Rank is based on consolidating four sentiment indicators, with half of the metrics below and half above average for Nippon Steel. Analyst Opinions are at a rank of 45 (worse than 55% of alternative investments), which means that currently, stock research analysts tend to warn against investing in the stock of the company. But they are changing their opinions! Analyst Opinions Change has a rank of 54, which means that stock research experts are more positive in their investment recommendations in the company. In other words, they are getting more optimistic of stock investments in Nippon Steel. More encouragingly, the Professional Investors rank is 86, which means that professional investors hold more stock in this company than in 86% of alternative investment opportunities. Pros tend to favor investing in this company. But Market Pulse is on the lower side with a rank of 20, which means that the current professional news and professional social networks are on the negative side when discussing this company (more negative news than for 80% of competitors). ...read more
RECOMMENDATION: With an Obermatt Sentiment Rank of 53 (more positive than 53% compared with investment alternatives), Nippon Steel has a reputation among professional investors that is above-average compared with that of its competitors. The sentiment signals are mixed for Nippon Steel. While analysts and the news channels are negative, there is a change in what stock research analysts think. Above-average institutional investors in this company support them. While the sentiment signals remain mixed with analysts and news channels pessimistic, some analysts are optimistic, which is an encouraging sign for investing in this stock. ...read more
Value Strategy: Nippon Steel Stock Price Value at the top
ANALYSIS: With an Obermatt Value Rank of 92 (better than 92% compared with alternatives) for 2023, Nippon Steel shares are significantly less expensive than comparable stocks. The Value Rank is based on consolidating four value indicators that are all above average for Nippon Steel. Price-to-Sales has a value of 81 which means that the stock price compared with what market professionals expect for future sales is lower than for 81% of comparable companies, indicating a good value for Nippon Steel's revenue size. The same is valid for expected Price-to-Profits, more favorable than for 88% of alternatives, and this is also true for the Price-to-Book capital ratio (also referred to as market-to-book ratio) with a Price-to-Capital Rank of 79. Compared with other companies in the same industry, dividend yields of Nippon Steel are expected to be higher than for 79% of all competitors (a Dividend Yield rank of 79). ...read more
RECOMMENDATION: The overall picture with a consolidated Value Rank of 92, is a strong buy recommendation based on Nippon Steel's stock price compared with the company's operational size and dividend yields. Since all value metrics are above the industry average, there is no objection to investing in Nippon Steel based on its detailed value metrics.
Growth Strategy: Nippon Steel Growth Momentum low
ANALYSIS: With an Obermatt Growth Rank of 41 (better than 41% compared with alternatives), Nippon Steel 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 indicators below average for Nippon Steel. Sales Growth has a below market rank of 30, which means that, currently, professionals expect the company to grow less than 70% of its competitors. The same is valid for Capital Growth, with a rank of 31, and Profit Growth, with a rank of 13. Currently, professionals expect the company to grow its profits less than 87% of its competitors). Only shareholders are optimistic. Stock Returns are above average at a rank of 93, which means that the stock returns have recently been above 93% of alternative investments. ...read more
RECOMMENDATION: The overall picture with a consolidated Value Rank of 41, is a HOLD recommendation for growth and momentum investors. That picture may be the result for a company that has reached the bottom. All went south for Nippon Steel, and it still looks bad, but some investors already see light at the end of the tunnel, rewarding the stock with an above-market return. It could also mean that investors are correcting an overreaction to negative news. If that were the case, the positive shareholder returns are not yet a sign of recovery. Investors should look closely at the Value and Sentiment indicators before they make a stock purchasing decision, because growth is unlikely to be the driving argument behind this investment. ...read more
Safety Strategy: Nippon Steel Debt Financing Safety above-average
| SAFETY METRICS | June 1, 2023 | |||||||
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| LEVERAGE | ||||||||
| LEVERAGE | 38 |
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| REFINANCING | ||||||||
| REFINANCING | 79 |
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| LIQUIDITY | ||||||||
| LIQUIDITY | 61 |
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| CONSOLIDATED RANK: SAFETY | ||||||||
| CONSOLIDATED RANK: SAFETY | 72 |
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ANALYSIS: With an Obermatt Safety Rank of 72 (better than 72% compared with alternatives), the company Nippon Steel 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 Steel 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 Nippon Steel. Refinancing is at 79, meaning the portion of the debt that is about to be refinanced is below average. It has less debt in the refinancing stage than 79% of its competitors. Liquidity is also good at 61, meaning the company generates more profit to service its debt than 61% of its competitors. This indicates that the company is safer when it comes to debt service. However, Leverage is rather large at 38, which means the company has an above-average debt-to-equity ratio. It has more debt than 62% of its competitors. ...read more
RECOMMENDATION: With an Obermatt Safety Rank of 72 (better than 72% compared with alternatives), Nippon Steel has a financing structure that is safer than that of its competitors. This is not bad if things go well. The higher debt level means better returns to shareholders if things go well. Many top-performing companies operate with higher debt levels, and Nippon Steel could be in that group. But if you expect the environment to turn rougher, the higher leverage could become a problem. The same is valid if you expect interest rates to rise. That could squeeze shareholder returns, which so far have benefitted from better conditions. ...read more
Combined financial peformance: Nippon Steel Top Financial Performance
| COMBINED PERFORMANCE | June 1, 2023 | |||||||
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| VALUE | ||||||||
| VALUE | 92 |
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| GROWTH | ||||||||
| GROWTH | 41 |
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| SAFETY | ||||||||
| SAFETY | 61 |
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| COMBINED | ||||||||
| COMBINED | 81 |
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ANALYSIS: With an Obermatt Combined Rank of 81 (better than 81% compared with investment alternatives), Nippon Steel (Steel, Japan) shares have much better financial characteristics than comparable stocks. Shares of Nippon Steel are a good value (attractively priced) with a consolidated Obermatt Value Rank of 92 (better than 92% of alternatives), are safely financed (Safety Rank of 72, which means low debt burdens), but show below-average growth (Growth Rank of 41). ...read more
RECOMMENDATION: An Obermatt Combined Rank of 81, is a strong buy recommendation based on Nippon Steel's financial characteristics. As the company Nippon Steel's key financial metrics exhibit good value (Obermatt Value Rank of 92) but low growth (Obermatt Growth Rank of 41) while being safely financed (Obermatt Safety Rank of 72), it may be a safer investment because companies with low debt can better withstand times of crises. Yet the good value, better than 92% of comparable companies, may also indicate that the company's future is challenging. If you believe that low growth is temporary or just due to a specific current event, you may conclude that the good value of the stock provides an attractive investment opportunity and the downside is limited due to below-average financing risks. ...read more
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