The average target price of 7974.T is 13531 and suggests 6% upside potential. Usually, this means a HOLD recommendation among investment firms. This neutral recommendation suggests no significant price movement, up or down, in the next 12 months. The most optimistic analyst has a target price of 20780.0. This translates into 62% upside potential in the best case. On the other hand, the most pessimistic analyst has a target price of 8540.0. This is equivalent to 33% downside potential in the worst case. 

Nintendo Co., Ltd., together with its subsidiaries, develops, manufactures, and sells home entertainment products in Japan, the Americas, Europe, and internationally. It offers video game platforms, playing cards, Karuta, and other products; and handheld and home console hardware systems and related software. The company was formerly known as Nintendo Playing Card Co., Ltd. and changed its name to Nintendo Co., Ltd. in 1963. Nintendo Co., Ltd. was founded in 1889 and is headquartered in Kyoto, Japan.

Japan

Nintendo Co., Ltd.

Consumer Cyclical

The company has a track record of regular dividend payments. It has paid dividends in each of the past ten years. Dividend per share (DPS) has grown yearly, but the dynamics are somewhat mixed. In the past 12 months, the dividend yield has been low and below its peers. On average, the company pays dividends twice a year. 

7974.T reported revenue of JPY 1 164 922mn in the last 12 months, down 6% from FY24. At the same time, the dynamics of cash flow, as measured by free cash flow (FCF), were drastically different. EPS fell 13% from FY24 to JPY 239.48. Market expects EPS to reach JPY 234.42 in FY25.

The stock's performance has been mixed in the past six months, with growth following a decline. There is no clear price trend compared to its global peers from the same sector and industry (as shown above). The stock has outperformed this peer group by 19ppts over past six months and grown 8ppts slower in the past month. This is largely true for peers from the same country and sector. With respect to the stock's valuation against its peers, its overall price performance is neutral.

The company has reported good EBITDA margins compared to its global peers in recent years. EBITDA margin amounted to 23.7% in the last 12 months, a decline from 24.0% in FY24. 

Historically, 7974.T has reported very strong net margins compared to its global peers. Specifically, in the last 12 months, this metric equalled 23.9%, down from 25.9% in FY24. 

Nintendo Co., Ltd. reported a return on equity (RoE) of 10.3% in the last 12 months, down from 12.4% in FY24. The market consensus projects an RoE of 7.0% in FY25, again behind its peers. 

Another important profitability metric, return on assets (RoA), amounted to 8.2% in the last 12 months, a decrease from 9.9% in FY24. The market analysts predict that RoA will be 5.6% in FY25, though below its peers in this period. 

In the last 12 months, the return on capital employed (RoCE) declined to 10.0%, above the peers. The consensus estimate for FY25 for RoCE is 5.9%, however, this time below its peers. 

The ratio of return on invested capital (RoIC) to the weighted average cost of capital (WACC) has been 3.3 in the past several years. This ratio implies a excellent shareholder value creation. 

The institutional, legal, and compliance risks associated with the company's country are minimal. In combination with stringent business standards, shareholder rights are very highly protected.

7974.T boasts high trading liquidity. The average private investor can sell his common position in the stock immediately. Liquidity is usually very stable and is average on the days with the lowest activity. The trading volume mostly stays the same even under highly turbulent market conditions. 

No other major risks have been identified.

The risk of default is minimal. We note robust profitability, strong debt servicing capacity, adequate interest coverage, solid cash flow generation, and an favourable capital structure, among the positive credit factors. Among the negative credit factors, we point to slow historical revenue growth, excessive margin volatility, and poor working capital management.

In highly turbulent market conditions, 7974.T is not volatile. In other words, the stock will fall far less than the index in times of extreme market volatility or shocking company news. Standalone, the worst-day losses (less than 1% of the time) will likely be very low. 

In normal market circumstances, 7974.T is not volatile. Put differently, without outstanding market volatility or shocking company news, the stock's price will stay within a narrow range. The stock's losses on its worst days (less than 1-5% of the time) will range from very low to negligible. 

Based on key historical and expected multiples, the stock is greatly overvalued relative to its peers. Specifically, the stock is 'expensive' on P/E, overvalued on EV/EBITD. 

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Nintendo Co., Ltd.

¥ 12800

5

Nintendo Co., Ltd.

¥ 12800

5

Risk factor

Profitability factor

Risk / Profitability

About

About

Risk factor

Profitability factor

¥ 12800

About

About

Nintendo Co., Ltd.

¥ 12800

5

Nintendo Co., Ltd.

¥ 12800

5

Risk factor

Profitability factor

Risk / Profitability

About

About

Risk factor

Profitability factor

¥ 12800

About

About

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