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West Japan Railway Co 9021

Morningstar Rating
JPY 3,184.00 +13.00 (0.41%)
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Company Report

JR West Earnings: Operating Leverage Drives Strong Recovery

No-moat-rated JR West’s recovery was stronger than expected, with operating income in the year to March 31, 2024 (fiscal 2024) doubling to JPY 180 billion, ahead of prior guidance and our forecast of JPY 160 billion. On the back of the strong recovery, management upgraded its fiscal 2028 operating income target by 5% to JPY 195 billion. We upgrade our forecasts by a similar amount and lift our fair value estimate 8% to JPY 2,800 per share. We consider the stock slightly overvalued at current prices. It offers a forward dividend yield of 2.3%, though with limited upside to earnings over the long term due to population decline.

Price vs Fair Value

9021 is trading at a 372% premium.
Price
JPY 3,171.00
Fair Value
JPY 3,912.00
Uncertainty
Medium
1-Star Price
JPY 4,367.00
5-Star Price
JPY 6,754.00
Economic Moat
Lnrz
Capital Allocation
Pysdrnlkg

Bulls Say, Bears Say

Bulls

JR West owns stable infrastructure and property assets and generates defensive cash flows.

Bears

JR West's service territory is less affluent and less densely populated than other parts of Japan.

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Trading Information

Previous Close Price
JPY 3,171.00
Day Range
JPY 3,166.003,198.00
52-Week Range
JPY 2,729.003,327.00
Bid/Ask
JPY 3,183.00 / JPY 3,187.00
Market Cap
JPY 1.55 Tril
Volume/Avg
1.1 Mil / 2.2 Mil

Key Statistics

Price/Earnings (Normalized)
6.64
Price/Sales
0.95
Dividend Yield (Trailing)
2.24%
Dividend Yield (Forward)
2.27%
Total Yield
2.24%

Company Profile

West Japan Railway, or JR West, is the main railway operator in Western Japan, headquartered in Osaka. It was originally established when the government-owned nationwide railway operator underwent a six-way territorial split in 1987. Its main assets are the Sanyo Shinkansen, which stretches from Osaka to Fukuoka, and the urban rail network in the Osaka-Kobe-Kyoto metropolitan area. Its nearly 5,000 kilometers of rail track covers a third of Japan’s population and a fifth of its land area. Rail operations contribute more than half of revenue, with most of the balance from retail operations, real estate investments, travel agencies, and hotels.
Sector
Industrials
Industry
Railroads
Stock Style Box
Large Core
Total Number of Employees
55,175

Competitors

Valuation

Metric
9021
9142
9022
Price/Earnings (Normalized)
6.648.249.81
Price/Book Value
1.401.180.82
Price/Sales
0.951.242.01
Price/Cash Flow
5.215.794.97
Price/Earnings
9021
9142
9022

Financial Strength

Metric
9021
9142
9022
Quick Ratio
0.620.541.50
Current Ratio
1.041.043.97
Interest Coverage
9.3633.367.37
Quick Ratio
9021
9142
9022

Profitability

Metric
9021
9142
9022
Return on Assets (Normalized)
4.76%5.68%5.33%
Return on Equity (Normalized)
16.44%13.70%13.13%
Return on Invested Capital (Normalized)
6.94%7.42%6.70%
Return on Assets
9021
9142
9022
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