|Bid||0.00 x 0|
|Ask||0.00 x 0|
|Day's Range||65.00 - 65.73|
|52 Week Range||35.82 - 72.82|
|Beta (5Y Monthly)||0.83|
|PE Ratio (TTM)||45.38|
|Forward Dividend & Yield||1.90 (2.91%)|
|Ex-Dividend Date||Mar 27, 2020|
|1y Target Est||78.19|
Nintendo (OTC: NTDOY), maker of the Switch video game console, has recently started to invest in other forms of entertainment for its flagship characters and stories. Like Disney (NYSE: DIS) has done with Marvel and Star Wars, Nintendo is building theme parks, creating mobile games, and partnering on video content for its Mario, Zelda, and Donkey Kong franchises. As of right now, the majority of Nintendo's revenue is related to the Switch console.
Investors have bid up gaming stocks in 2020, and Nintendo (OTCMKTS:NTDOY, OTCMKTS:NTDOF) has been no exception. Nintendo stock has gained a healthy 34% so far in 2020. Source: ESOlex / Shutterstock.com But even that rally doesn’t seem to incorporate all of the stock’s potential. After all, other gaming names have done far better — and with good reason. The sector increasingly looks like a long-term beneficiary of the novel coronavirus pandemic. Nintendo stock obviously is no exception. But it has a short-term boost on the way as well. New consoles and a strong online holiday shopping season should drive better-than-expected results in coming quarters. Management guidance, meanwhile, looks exceedingly conservative.InvestorPlace - Stock Market News, Stock Advice & Trading Tips Meanwhile, with NTDOY pulling back about 8% from last month’s highs, its valuation is attractive. On the whole, then, Nintendo looks like a winner, and Nintendo stock looks set to resume a breakout that’s taken a breather in recent weeks. The Pandemic Tailwind The new pandemic has led many gamers to spend more on their hobby. It has also brought lapsed gamers back into the fold, as consumers worldwide looked for something, anything, to do during “stay at home” orders this year. Both trends should be a tailwind for Nintendo stock — and not just in 2020. Existing gamers are far more likely to purchase the new gaming consoles on the way this year. I firmly expect a strong holiday season — in which consumers “reward” themselves for a difficult year — to boost those sales. Obviously, that will help Nintendo game revenue. Meanwhile, the company reportedly has a new Switch on the way in early 2021. That unit is due for an upgrade, and a new model could spark both hardware and software growth. 7 Cryptocurrencies to Stand the Test of Time So the near-term outlook appears bright. Nintendo management, however, isn’t singing the same tune. Beat and Raise Nintendo’s outlook for fiscal 2021, which ends March 31, doesn’t incorporate any growth at all. In fact, management expects sales to fall about 8%. Ordinary profit is projected to decline 20%. Certainly, that guidance seems to undercut the bull case for Nintendo stock. But with all due respect to Nintendo management, I’m not sure I believe that guidance will be correct. That’s because of the trends that I believe will drive a strong holiday season. It’s also because of how the guidance was released. Nintendo first gave its outlook on May 7, when it released fourth quarter earnings for fiscal 2020. Obviously, the world was in a very different spot at that point. We simply hadn’t seen the evidence of the short-term benefits in some sectors — including gaming — from the pandemic. In that environment, Nintendo no doubt aimed for caution. Nintendo then reiterated that guidance on Aug. 6, along with its Q1 report — even though revenue in the quarter actually rose 2.4%. The unchanged outlook does make some sense. There’s still some uncertainty in the world, and it would look somewhat strange for Nintendo to jack up its outlook after just one quarter. But after two quarters, such a move would make more sense. And so I firmly expect that the Q2 release next month will include a raised outlook. There’s simply too much demand out there for Nintendo sales to fall 8% for the full year. That raised outlook provides a potential catalyst for Nintendo stock, particularly with the pullback of the last few weeks. Nintendo Stock Is Not Expensive But there’s another aspect of the guidance to consider. Based on the current outlook, Nintendo stock is not terribly expensive. Per share, Nintendo expects 1,679 JPY in profit — about $16. That’s $2 per NTDOY ADR (each American Depository Receipt is one-eighth of a full share). In other words, NTDOY right now is trading at about 33x this year’s earnings. But I don’t believe that’s the correct way to look at it. Rather, it’s trading at 33x a depressed estimate of this year’s earnings — during a year in which a pandemic which had some impact on sales and raised expenses as well. Nintendo’s actual earnings power is far higher. And so with NTDOY at $67, investors are paying something in the range of 25x normalized earnings. In this market, that’s a multiple usually assigned to companies that are growing little, if at all. Nintendo will not be one of those companies. An expanding global gaming market, an impressive stable of intellectual property, and a new console cycle combine to suggest revenue should grow nicely over the next few years and beyond. And with net profit margins in the range of 20%, a good chunk of those incremental sales will drop to the bottom line. So, yes, Nintendo stock has gained 34% so far this year. It should still have further to run. On the date of publication, neither Matt McCall nor the InvestorPlace Research Staff member primarily responsible for this article held (either directly or indirectly) any positions in the securities mentioned in the article. More From InvestorPlace Why Everyone Is Investing in 5G All WRONG Top Stock Picker Reveals His Next 1,000% Winner Radical New Battery Could Dismantle Oil Markets Revolutionary Tech Behind 5G Rollout Is Being Pioneered By This 1 Company The post Another Breakout Is on the Way for Nintendo Stock appeared first on InvestorPlace.
(Bloomberg) -- Shares of game maker Nexon Co. soared to a record high in Tokyo after the surprise announcement that it will join Japan’s Nikkei 225 Stock Average, replacing retailer FamilyMart Co.Nexon, founded by South Korean billionaire Kim Jung-ju, closed 17% higher after touching its daily limit of a 20% gain earlier. The stock will be added to Japan’s blue-chip gauge on Oct. 29, Nikkei Inc. said.“It’s very much a surprise, one wouldn’t predict this pick at first,” said Keiichi Ito, chief quants analyst at SMBC Nikko Securities Inc. “If they chose based on liquidity, then there must have been other names to choose from.”Kim owns about 48% of Nexon’s stock through his holding company NXC Corp., according to data compiled by Bloomberg. Shares of the company, known for its Dungeon & Fighter and Maple Story games, have nearly doubled this year, helped by the stay-at-home theme amid the pandemic before the Nikkei nod.Stocks that had been cited by analysts as potential candidates to replace FamilyMart in the Nikkei 225 included Kakaku.com Inc., Zozo Inc., Square Enix Holdings Co., Lawson Inc., Skylark Holdings Co., Suntory Beverage & Food Ltd. and perennial pick Nintendo Co. Shares of Kakaku.com tumbled 7.8% Friday, Zozo slid 7.2%, Square Enix fell 3.9% and Skylark dropped 2.8%. Candidates for replacement often see share moves in the runup to the actual announcement.Passive funds tracking the Nikkei 225 will need to adjust their portfolios by the end of trading on Oct. 28. That means the Thursday evening announcement gave them just four trading sessions to buy the required 60 million shares of Nexon estimated by SMBC Nikko’s Ito, equivalent to 32 days worth of the stock’s average daily trading volume over the previous 25 days.Out and InThe acquisition of FamilyMart by trading house Itochu Corp. was approved at an extraordinary shareholder’s meeting Thursday, and the convenience-store operator will be delisted on Nov. 12.When a Nikkei 225 stock is delisted or removed, gauge operator Nikkei Inc. usually replaces it with a highly liquid name from the same sector. While Nintendo has both the liquidity and market representation, its large share price has often been seen as a drawback for the price-weighted measure.For market watchers keeping track of changes to the Nikkei, it’s been a fairly busy year for announcements. Japan Exchange Group Inc. joined the measure in July, replacing Sony Financial Holdings after Sony Corp. took full control of the unit. In September it was announced that SoftBank Corp. would be added and Nippon Kayaku Co. would be cut.The next potential vacancy may be created if Nippon Telegraph & Telephone Corp.’s $40 billion buyout plan for mobile carrier NTT Docomo Inc. succeeds. Rohm Co. and Murata Manufacturing have been named as potential replacements.(Updates with closing share price changes)For more articles like this, please visit us at bloomberg.comSubscribe now to stay ahead with the most trusted business news source.©2020 Bloomberg L.P.