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Nintendo Co Ltd 7974

Morningstar Rating
JPY 8,252.00 −29.00 (0.35%)
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Company Report

Nintendo Earnings: New Console Coming Soon, Expect Solid Launch; Fair Value Up 4% to JPY 8,000

Nintendo’s operating income guidance for fiscal 2024 (ending March 2025) is JPY 400 billion, down 24.4% year on year, which is below our expectations as it does not include the contribution from the new console. Moreover, the company’s target of shipping 13.5 million Switch consoles in the new fiscal year, down 14% year on year, seems stretched, given the weak pipeline and the more than 20% decline in Switch console shipments in the second half of fiscal 2023. At the same time, Nintendo’s comment that it will make more announcements about the new console this fiscal year may lead people to decide to wait another year for the launch of the new console, even dragging down Switch shipments in the current fiscal year. As a result, if the new console is not launched, it would be difficult for the company to achieve this year’s operating income guidance. However, we maintain our medium-term view that Nintendo will continue to gradually expand its user base on the new platform by leveraging its attractive characters, which is the source of our wide moat rating. Our fair value estimate for Nintendo is revised to JPY 8,000 per share from JPY 7,700 previously and we believe that the shares are currently fairly valued.

Price vs Fair Value

7974 is trading at a 263% premium.
Price
JPY 8,281.00
Fair Value
JPY 6,533.00
Uncertainty
Medium
1-Star Price
JPY 14,542.00
5-Star Price
JPY 7,942.00
Economic Moat
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Capital Allocation
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Bulls Say, Bears Say

Bulls

The value of Nintendo’s popular characters has not been damaged, and they will help to expand the user base.

Bears

While its characters are popular, most of Nintendo’s earnings are still constrained by its own hardware shipments.

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News

Trading Information

Previous Close Price
JPY 8,281.00
Day Range
JPY 8,197.008,342.00
52-Week Range
JPY 5,854.009,028.00
Bid/Ask
JPY 8,236.00 / JPY 8,252.00
Market Cap
JPY 9.61 Tril
Volume/Avg
2.8 Mil / 4.0 Mil

Key Statistics

Price/Earnings (Normalized)
20.43
Price/Sales
5.77
Dividend Yield (Trailing)
2.55%
Dividend Yield (Forward)
2.55%
Total Yield
2.53%

Company Profile

Nintendo started its video game console business in 1983 by launching the NES, and started its portable console business in 1989 by launching the Game Boy. Since then, the firm has focused on expanding the gaming population by delivering unique entertainment experiences on its original console systems; the Wii and Nintendo DS are its most popular hardware. However, Nintendo not only makes game consoles, but also owns world-renowned IPs such as Super Mario, Pokemon, and Zelda, which have been a source of cash flow for 40 years. 2020 was the 35th anniversary of Super Mario, Nintendo's most famous character.
Sector
Communication Services
Industry
Electronic Gaming & Multimedia
Stock Style Box
Large Core
Total Number of Employees
7,317

Competitors

Valuation

Metric
7974
6758
EA
Price/Earnings (Normalized)
20.4318.1619.56
Price/Book Value
3.702.064.79
Price/Sales
5.771.224.86
Price/Cash Flow
25.648.1716.26
Price/Earnings
7974
6758
EA

Financial Strength

Metric
7974
6758
EA
Quick Ratio
4.190.471.24
Current Ratio
4.760.691.37
Interest Coverage
5,916.8165.2526.22
Quick Ratio
7974
6758
EA

Profitability

Metric
7974
6758
EA
Return on Assets (Normalized)
23.04%2.50%13.42%
Return on Equity (Normalized)
29.20%11.52%24.03%
Return on Invested Capital (Normalized)
27.76%6.73%18.47%
Return on Assets
7974
6758
EA
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Electronic Gaming & Multimedia Industry Comparables

Ticker
Name
Morningstar Rating for Stocks
Capital Allocation
Economic Moat
Market Cap
NTES
NetEase Inc ADRTqcvdwylqRrbxxl$63.4 Bil
NTDOF
Nintendo Co LtdZfh$61.5 Bil
NTDOY
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NETTF
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EA
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TTWO
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RBLX
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NEXOF
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NEXOY
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BILI
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