The last quarter’s results were the best in four years. We continue our analysis be reviewing the performance by Peer Group.
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. The Results Scores are then aggregated for each Peer Group weighted by market capitalization.
For details of the constituents of each Peer Group, please download our App here.
PEER GROUP RESULTS SCORES BY 12 LARGEST PEER GROUPS 11/17
All of the twelve largest Peer Groups currently have positive aggregate results scores and only Insurance had a negative 3 month change. The highest Score is for Diversified Chemicals, the lowest being for Insurance. Only Personal Products is Fully Priced (“FP”) and it is the closest Peer Group to being overbought. Commercial Banks and Sogo Shosha are considered Deep Value (“DV”) and Diversified Industrial Electronics has negative earnings (“NE”) due to Toshiba (6502).
PEER GROUP RESULTS SCORES 11/17 ▲
Technology Hardware and Machinery Sector Peer Groups dominate the list of top-ranked Peer Groups Results Scores. Of these Vacuum Equipment and SPE are showing signs of peaking out and both Peer Groups are now overbought. Both Software Peer Groups are Fully Priced (“FP”) but Oil & Gas E&P is considered Speculative (“SP”) and has three companies with more than 100% upside in the JA valuation model as well as being the only one of the twelve that is close to being oversold. For growth-orientated investors there is more upside in Semiconductor Materials (Sumco) and Valves, Pumps & Hydraulics (SMC).
PEER GROUP RESULTS SCORES 11/17 ▼
The Wholesale Sector has three entries in the bottom-ranked Peer Groups Results Scores but the largest Peer Group on the list is Amusement Machinery. Three of the Peer Groups on the list are considered Deep Value (“DV”) but none has sufficient upward momentum to be of interest.
PEER GROUP RESULTS SCORES 3 MONTH CHANGE 11/17 ▲
With three securities/financial services Peer Groups on the list the market should be near a short-term peak. Seven of the Peer Groups above have negative Price Scores and of these three (Oil & Gas E&P, Shipping and Shipbuilding) are considered Speculative or have Negative Earnings, so there is plenty of food for thought for contrarians here. Watches (Citizen) is worth considering.
PEER GROUP RESULTS SCORES 3 MONTH CHANGE 11/17 ▼
Most of these Peer Groups are small enough to be dominated by the Results Score for one company. Nevertheless investors in Nihon M&A Center and JINS have already seen the negative result score trend reflected in the respective share prices.
Our next post will look at Results Scores for individual companies.