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Nomura Holdings Inc ADR NMR

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Stock XNYS Rating as of
$4.15 +0.04 (0.97%)
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Company Report

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Japan Securities Firms’ Earnings: We Lift Our Fair Value for Daiwa After Big Buyback Announcement

Michael Makdad

We are raising our fair value estimate for Daiwa Securities to JPY 800, or 0.76 times book value, from JPY 650, or 0.62 times book value, while maintaining our estimate for Nomura Holdings at JPY 590, or 0.54 times book value. Daiwa’s September-quarter ROE of 8.0% outperformed Nomura’s 4.3% and our estimate of around 6% for the sector average. Daiwa’s earnings were well-balanced among its retail, wholesale, and asset-management segments, in contrast to Nomura, which lagged in its global wholesale business even as it enjoyed strong retail-segment profits in Japan.

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Price vs Fair Value

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NMR is trading at a 1% discount.
Price
$4.15
Fair Value
$4.20
Uncertainty
Medium
1-Star Price
$6.49
5-Star Price
$9.57
Economic Moat
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Capital Allocation
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Bulls Say, Bears Say

Bulls

Given its business of selling and managing financial assets, Nomura is one of the Japanese companies best positioned to increase earnings quickly in a strongly reflationary macroeconomic scenario.

Bears

Nomura has posted large unexpected losses several times in its history, such as the JPY 700 billion loss in fiscal 2008, which included exposure to Iceland and the Madoff scheme as well as write-downs of real estate assets.

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Trading Information

Previous Close Price
$4.11
Day Range
$4.09–4.18
52-Week Range
$3.38–4.47
Bid/Ask
$3.50 / $4.30
Market Cap
$12.51 Bil
Volume/Avg
6.3 Mil / 6.9 Mil

Key Statistics

Price/Earnings (Normalized)
13.51
Price/Sales
1.46
Dividend Yield
—
Dividend Yield (Forward)
—
Total Yield
1.24%

Company Profile

Nomura is Japan’s largest broker, about twice the size of rival Daiwa Securities and roughly three times the size of the securities units of the three megabanks. It is also the largest asset-management company in Japan, with a similar size differential compared with its rivals. Despite its topnotch brand name in retail broking and asset management in Japan, Nomura has struggled to compete effectively in the institutional securities business against larger global rivals. In 2008, Nomura bought European and Asian assets of the failed Lehman Brothers, which led to a sharply higher cost base but did not provide commensurate revenue. Nomura has reduced the scale of these businesses but maintains its ambition to compete globally with the top players.
Sector
Financial Services
Industry
Capital Markets
Stock Style Box
Large Value
Total Number of Employees
27,129
Website
https://www.nomuraholdings.com

Competitors

Valuation

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Metric
NMR
MS
8601
Price/Earnings (Normalized)
 13.5113.7416.37
Price/Book Value
 0.571.470.92
Price/Sales
 1.462.662.10
Price/Cash Flow
 11.368.509.70
Price/Earnings
NMR
MS
8601

Financial Strength

Metric
NMR
MS
8601
Quick Ratio
 ———
Current Ratio
 ———
Interest Coverage
 ———
Quick Ratio
No chart available

Profitability

Metric
NMR
MS
8601
Return on Assets (Normalized)
 0.24%0.83%0.43%
Return on Equity (Normalized)
 3.79%10.67%9.04%
Return on Invested Capital (Normalized)
 ———
Return on Assets
NMR
MS
8601

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