The last quarter’s results were the best in four years. We continue our analysis be reviewing the performance by company and will review the top and bottom companies by Results Score and three-month change in Results Score in three cap ranges, Large, Mid and Small.
The Japan Analytics Results Score is a measure of earnings results and earnings momentum which covers the last eight quarters for revenue and operating income.
The score has a maximum of 30 and minimum of -30.
TOP 20 LARGE CAP COMPANIES RANKED BY RESULTS SCORE 11/17
Technology Hardware companies have 5 of the top 20 followed by Electrical Equipment (3), Other Consumer Products (3) Healthcare (2) and Machinery (2). Of the top 20 only Tokyo Electron (TEL) has a Results Score lower than three months ago. Showa, Fuji Machine and Alps Electric have seen double digit increases. The average three-month increase for the list was 29% with Tokai, Tokyo, Yamaha Motor, Showa and Zeon being the notable laggards. Only TEL is Overbought but Minebea Mitsumi is close. The lowest Price Scores on the list are Sumitomo Dainippon Pharma, Tokai Tokyo and Rohm. Only SUMCO, Nintendo and Asahi Intecc are Fully Priced (“FP”). The companies with the largest upside in the Japan Analytics no-growth valuation model are Showa, Sumitomo Dainippon Pharma, Zeon, Yamaha Motor and Fuji Machine.
BOTTOM 20 LARGE CAP COMPANIES RANKED BY RESULTS SCORE 11/17
The bottom ranked companies by Results Score contain 4 Banks, 4 Machinery companies (of which three are pachinko machinery makers, two of which are loss-making) and 3 Healthcare companies. Seven companies have seen double digit declines in the last three months and the largest increase is Astellas at 7. Only Ogaki Kyoritsu Bank and Hiroshima Bank are oversold with Hokkoku Bank being nearly so. The average change in Market Cap was 4% with Universal Entertainment being the outlier wit ha 36% increase. Peptidream is the only fully priced stock and also the only one with a Price Score of greater than 1.0. Only Fuji Media has significant upside in our valuation model.
TOP 20 LARGE CAP COMPANIES RANKED BY 3 MONTH CHANGE IN RESULTS SCORE 11/17
Four banks and four construction companies are on the list of most improved over the last three months. Apart from the banks (which our model finds attractive principally for their discounts to book value), only Tokyo Construction and Penta-Ocean Construction are attractive on our model.
BOTTOM 20 LARGE CAP COMPANIES RANKED BY 3 MONTH CHANGE IN RESULTS SCORE 11/17
Banks again feature predominantly on this list showing the need for due diligence when attempting to bottom fish in this sector. Of note on the short side, are both NIFCO and Nihon M&A Center. Only Toei has significant upside in the JA valuation model.
The next post will cover mid-caps.