October 5, 2023
Top 10 Stock Nitto Denko Buy Recommendation

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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 Nitto Denko Buy

360 METRICS	October 5, 2023
VALUE
VALUE	35
GROWTH
GROWTH	45
SAFETY
SAFETY	98
SENTIMENT
SENTIMENT	38
360° VIEW
360° VIEW	57

ANALYSIS: With an Obermatt 360° View of 57 (better than 57% compared with alternatives), overall professional sentiment and financial characteristics for the stock Nitto Denko are above average. The 360° View is based on consolidating four consolidated indicators, with three out of four metrics below average for Nitto Denko. The only rank that is above average is the consolidated Safety Rank at 98, which means that the company has a financing structure that is safer than those of 98% comparable companies when looking at the amount of its debt, its refinancing requirements, and its ability to service debt. But the Value, Growth and Sentiment Ranks are all below average. The consolidated Value Rank has a less desirable rank of 35, which means that the share price of Nitto Denko is on the high side compared with typical size in indicators such as revenues, profits, and invested capital. The consolidated Growth Rank also has a low rank of 45, which implies that the company exhibits below-average growth momentum when looking at financial metrics such as revenue, profit, and invested capital growth as well as stock returns. Finally, the consolidated Sentiment Rank is also low at a rank of 38, which means that professional investors are more pessimistic about the stock than for 62% of alternative investment opportunities. While Safety is strong, it’s not the most critical indicator, so we suggest proceeding with caution if you are considering this stock. ...read more

RECOMMENDATION: With a consolidated 360° View of 57, Nitto Denko is better positioned than 57% of all alternative stock investment opportunities based on the Obermatt Method. As only the financing structure, namely the Safety Rank, is on the safer side and all other consolidated Obermatt Ranks are below-average, this is a riskier stock investment proposition. This is especially the case, since professional investor sentiment, the consolidated Obermatt Sentiment Rank, is also low at 38. The negative market view on Nitto Denko may be the high stock price (low value) or the low level of growth. This is a problem. As the Safety Rank is the least significant of the four consolidated Obermatt Ranks, we cannot identify enough positive facts that are visible today to make a case for this stock investment. The company may have a strong future which would justify the high stock price, but this is not visible from investor behavior today. 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. Prudent investors may only want to invest a smaller portion of their wealth in such situations. Young investors can carry more risk but should still thrive for sufficient diversification. ...read more

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Sentiment Strategy: Professional Market Sentiment for Nitto Denko only reserved

SENTIMENT METRICS	October 5, 2023
ANALYST OPINION
ANALYST OPINION	11
OPINIONS CHANGE
OPINIONS CHANGE	50
PRO HOLDINGS
PRO HOLDINGS	78
MARKET PULSE
MARKET PULSE	56
CONSOLIDATED RANK: SENTIMENT
CONSOLIDATED RANK: SENTIMENT	38

ANALYSIS: With an Obermatt Sentiment Rank of 38 (better than 38% compared with alternatives), overall professional sentiment and engagement for the stock Nitto Denko is below industry average. The Sentiment Rank is based on consolidating four sentiment indicators, with all but one indicator above average for Nitto Denko. Analyst Opinions are at a rank of 11 (worse than 89% 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 50, which indicates a shift in stock research experts opinions for the better. In other words, they are getting more optimistic about stock investments in Nitto Denko. Even better, the Professional Investors rank is 78, meaning that professional investors hold more stock in this company than in 78% of alternative investment opportunities. Pros tend to favor investing in this company. Furthermore, Market Pulse has a rank of 56, which means that the current professional news and professional social networks are upbeat when discussing this company (more positive news than for 56% of competitors). ...read more

RECOMMENDATION: With a consolidated Sentiment Rank of 38 (less encouraging than 62% compared with investment alternatives), Nitto Denko has a reputation among professional investors that is below that of its competitors. While analysts are still critical of the company, some are changing their minds. In addition, the professional news channels are optimistic, and many institutional investors have already bought stock in the company. These are encouraging signals, despite the still lower level of analyst recommendations. They may be due to a problematic past, and about to change. The positive sentiment signals are stronger than the negative. ...read more

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Value Strategy: Nitto Denko Stock Price Value below-average critical

VALUE METRICS	October 5, 2023
PRICE VS. REVENUES (P/S)
PRICE VS. REVENUES (P/S)	26
PRICE VS. PROFITS (P/E)
PRICE VS. PROFITS (P/E)	64
PRICE VS. CAPITAL (Market-to-Book)
PRICE VS. CAPITAL (Market-to-Book)	34
DIVIDEND YIELD
DIVIDEND YIELD	38
CONSOLIDATED RANK: VALUE
CONSOLIDATED RANK: VALUE	35

ANALYSIS: With an Obermatt Value Rank of 35 (worse than 65% 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 three out of four indicators below average for Nitto Denko. Only Price-to-Profit (also referred to as price-earnings, P/E) indicates good stock value with a rank of 64, which means that the stock price compared with what market professionals expect for future profits is lower than for 64% of comparable companies, indicating a good value concerning Nitto Denko's profit levels. But Price-to-Sales is 26 which means that the stock price compared with what market professionals expect for future profits is higher than for 74% of comparable companies, indicating a low value concerning Nitto Denko'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 34 and for dividend yield, which is lower than for 62% 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 35, is a hold recommendation based on Nitto Denko's stock price compared with the company's operational size and dividend yields. Can we rely on only one good value indicator? Only if we know the company well. In this case, a high Price-to-Profit Rank, while Price-to-Sales and Price-to-Book are both below the market typical levels, means that the company can charge higher prices for its products and needs less capital to produce them. If this is sustainable, then Nitto Denko is a good investment because profits count most in enterprise valuations. The low dividend yield indicates that the company is confident it can do something with the generated cash that is more valuable than paying the profits out to the shareholders in the form of dividends. ...read more

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Growth Strategy: Nitto Denko Growth Momentum low

GROWTH METRICS	October 5, 2023
REVENUE GROWTH
REVENUE GROWTH	30
PROFIT GROWTH
PROFIT GROWTH	51
CAPITAL GROWTH
CAPITAL GROWTH	33
STOCK RETURNS
STOCK RETURNS	85
CONSOLIDATED RANK: GROWTH
CONSOLIDATED RANK: GROWTH	45

ANALYSIS: With an Obermatt Growth Rank of 45 (better than 45% 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 51, which means that currently professionals expect the company to grow its profits more than 51% of its competitors. This is a good sign for shareholders, which is confirmed by an above-average Stock Returns rank of 85 (above 85% of alternative investments). But Sales Growth has a below the median rank of 30, which means that, currently, professionals expect the company to grow less than 70% of its competitors, and Capital Growth also has a lower rank of 33. ...read more

RECOMMENDATION: The overall picture with a consolidated Growth Rank of 45, 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. ...read more

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Safety Strategy: Nitto Denko Debt Financing Safety very solid

SAFETY METRICS	October 5, 2023
LEVERAGE
LEVERAGE	98
REFINANCING
REFINANCING	49
LIQUIDITY
LIQUIDITY	92
CONSOLIDATED RANK: SAFETY
CONSOLIDATED RANK: SAFETY	98

ANALYSIS: With an Obermatt Safety Rank of 98 (better than 98% compared with alternatives) for 2023, 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 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 92, meaning the company generates more profit to service its debt than 92% 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 49, 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 51% of its competitors. ...read more

RECOMMENDATION: With a consolidated Safety Rank of 98 (better than 98% 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. ...read more

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Combined financial peformance: Nitto Denko Above-Average Financial Performance

COMBINED PERFORMANCE	October 5, 2023
VALUE
VALUE	35
GROWTH
GROWTH	45
SAFETY
SAFETY	92
COMBINED
COMBINED	74

ANALYSIS: With an Obermatt Combined Rank of 74 (better than 74% compared with investment alternatives), Nitto Denko (Specialty Chemicals, Japan) shares have above-average financial characteristics compared with similar stocks. Shares of Nitto Denko are low in value (priced high) with a consolidated Value Rank of 35 (worse than 65% of alternatives) and show below-average growth (Growth Rank of 45) but are safely financed (Safety Rank of 98), which means low debt burdens. ...read more

RECOMMENDATION: A Combined Rank of 74, is a buy 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 35) and low growth (Obermatt Growth Rank of 45), 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 98) 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. ...read more

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