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Murata Manufacturing Co Ltd 6981

Morningstar Rating
JPY 2,996.50 +11.50 (0.39%)
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Company Report

Murata: Passive Components Suppliers’ Earnings: Cautious Guidance Amid Demand Recovery Uncertainty

Three passive component suppliers, Murata Manufacturing, Kyocera, and TDK announced their earnings results for fiscal 2023 (ending March 2024) Friday, April 26, and each company’s operating income guidance for the new fiscal year fell short of our expectations. We believe that they made conservative assumptions for sales and capacity utilization especially in the second half of the fiscal year, as they were less confident of a full recovery in end demand. Nevertheless, TDK’s guidance may disappoint the market as it is most divergent from our expectations and the market’s. While we maintain our fair value estimates for the three companies, we have lowered our fiscal 2024 operating income forecasts for Murata and Kyocera, reflecting price erosion for automotive passive components and a slower-than-expected recovery in capital spending for industrials and general servers. We plan to revise our TDK earnings forecasts after the company announces its new midterm plan at next month’s investor day. We believe Murata Manufacturing’s shares are undervalued, while Kyocera and TDK are fairly valued.

Price vs Fair Value

6981 is trading at a 772% premium.
Price
JPY 2,996.50
Fair Value
JPY 1,246.00
Uncertainty
Medium
1-Star Price
JPY 7,511.00
5-Star Price
JPY 5,469.00
Economic Moat
Lhwbw
Capital Allocation
Dmngwphy

Bulls Say, Bears Say

Bulls

Murata will benefit from increasing passive components demand per phone, as a result of advancing technology in telecommunications. In particular, diffusion of LTE and LTE-advanced networks will be the driver.

Bears

The average pricing of smartphones has been gradually decreasing since 2012 and the profitability of handset makers is declining as a result. Consequently, the price-cut pressure for components will strengthen.

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News

Trading Information

Previous Close Price
JPY 2,985.00
Day Range
JPY 2,936.003,005.00
52-Week Range
JPY 2,461.003,141.00
Bid/Ask
JPY 2,994.50 / JPY 2,997.00
Market Cap
JPY 5.66 Tril
Volume/Avg
4.3 Mil / 5.3 Mil

Key Statistics

Price/Earnings (Normalized)
25.52
Price/Sales
3.40
Dividend Yield (Trailing)
1.74%
Dividend Yield (Forward)
1.80%
Total Yield
1.74%

Company Profile

Murata Manufacturing produces passive components for electronic devices. Passive components are necessary for all electronic circuits, used to enable wireless communication, store electricity and handle electric flow, remove electromagnetic noise from circuits, and so on. Thus, passive components are imperative for electronic circuits. For instance, one high-end smartphone contains more than 1,000 passive components. Murata Manufacturing is the global top passive components supplier with 40% market share on MLCC and SAW filters.
Sector
Technology
Industry
Electronic Components
Stock Style Box
Large Core
Total Number of Employees
73,828

Competitors

Valuation

Metric
6981
6976
009150
Price/Earnings (Normalized)
25.52174.0822.80
Price/Book Value
2.181.241.48
Price/Sales
3.401.331.20
Price/Cash Flow
14.389.847.98
Price/Earnings
6981
6976
009150

Financial Strength

Metric
6981
6976
009150
Quick Ratio
2.642.321.05
Current Ratio
4.393.691.75
Interest Coverage
0.499.45
Quick Ratio
6981
6976
009150

Profitability

Metric
6981
6976
009150
Return on Assets (Normalized)
7.44%0.78%5.35%
Return on Equity (Normalized)
8.90%1.29%7.91%
Return on Invested Capital (Normalized)
9.79%0.83%6.48%
Return on Assets
6981
6976
009150
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Capital Allocation
Economic Moat
Market Cap
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MRAAY
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MRAAF
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GLW
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TTDKY
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