NEC (DB:NEC1) - Share price, News & Analysis

NEC1 fundamental analysis
Snowflake Score
Valuation	5/6
Future Growth	0/6
Past Performance	2/6
Financial Health	6/6
Dividends	4/6

NEC1 Stock Overview

NEC Corporation operates as a provider of information and communication technology solutions in Japan and internationally.

Rewards

Trading at 42.9% below our estimate of its fair value

Risk Analysis

Earnings are forecast to decline by an average of 2.2% per year for the next 3 years

Unstable dividend track record

NEC Competitors

Microsoft

NasdaqGS:MSFT

US$2.1t

Cisco Systems

NasdaqGS:CSCO

US$204.9b

Oracle

NYSE:ORCL

US$193.4b

Intel

NasdaqGS:INTC

US$181.1b

Price History & Performance

Summary of all time highs, changes and price drops for NEC
Historical stock prices
Current Share Price	JP¥39.60
52 Week High	JP¥49.34
52 Week Low	JP¥34.33
Beta	0.55
1 Month Change	4.21%
3 Month Change	3.45%
1 Year Change	-16.82%
3 Year Change	28.70%
5 Year Change	78.22%
Change since IPO	97.02%

Shareholder Returns

	NEC1	DE IT	DE Market
7D	3.1%	-8.5%	-3.7%
1Y	-16.8%	-6.2%	-14.1%

Return vs Industry: NEC1 underperformed the German IT industry which returned -6.2% over the past year.

Return vs Market: NEC1 underperformed the German Market which returned -14.1% over the past year.

Price Volatility

Is NEC1's price volatile compared to industry and market?
NEC1 volatility
NEC1 Average Weekly Movement	4.6%
IT Industry Average Movement	6.5%
Market Average Movement	6.3%
10% most volatile stocks in DE Market	10.4%
10% least volatile stocks in DE Market	3.5%

Stable Share Price: NEC1 is less volatile than 75% of German stocks over the past 3 months, typically moving +/- 5% a week.

Volatility Over Time: NEC1's weekly volatility (5%) has been stable over the past year.

About the Company

Founded	Employees	CEO	Website
1899	114,714	Takayuki Morita	https://www.nec.com

NEC Corporation operates as a provider of information and communication technology solutions in Japan and internationally. The company operates in five segments: Public Solutions, Public Infrastructure, Enterprise, Network Services, and Global. It provides systems integration services comprising systems implementation and consulting; maintenance and support services; outsourcing and cloud services; and system equipment.

NEC Fundamentals Summary

How do NEC's earnings and revenue compare to its market cap?
NEC1 fundamental statistics
Market Cap	JP¥1.48t
Earnings (TTM)	JP¥141.28b
Revenue (TTM)	JP¥3.01t

10.5x

P/E Ratio

0.5x

P/S Ratio

Is NEC1 overvalued?

See Fair Value and valuation analysis

Earnings & Revenue

Key profitability statistics from the latest earnings report
NEC1 income statement (TTM)
Revenue	JP¥3.01t
Cost of Revenue	JP¥2.13t
Gross Profit	JP¥886.41b
Other Expenses	JP¥745.14b
Earnings	JP¥141.28b

Last Reported Earnings

Mar 31, 2022

Next Earnings Date

n/a

Earnings per share (EPS)	518.53
Gross Margin	29.41%
Net Profit Margin	4.69%
Debt/Equity Ratio	24.9%

How did NEC1 perform over the long term?

See historical performance and comparison

Dividends

2.0%

Current Dividend Yield

19%

Payout Ratio

Valuation

Is NEC undervalued compared to its fair value and its price relative to the market?

Valuation Score

5/6

Valuation Score 5/6

Below Fair Value
Significantly Below Fair Value
PE vs Industry
PE vs Market
PEG Ratio
PB vs Industry

42.9%

Undervalued compared to fair value

Share Price vs. Fair Value

Below Fair Value: NEC1 (€39.6) is trading below our estimate of fair value (€69.39)

Significantly Below Fair Value: NEC1 is trading below fair value by more than 20%.

Price To Earnings Ratio

PE vs Industry: NEC1 is good value based on its PE Ratio (10.5x) compared to the German IT industry average (24.6x).

PE vs Market: NEC1 is good value based on its PE Ratio (10.5x) compared to the German market (17.9x).

Price to Earnings Growth Ratio

PEG Ratio: NEC1's earnings are forecast to decline next year, so we can't calculate its PEG ratio.

Price to Book Ratio

PB vs Industry: NEC1 is good value based on its PB Ratio (1x) compared to the DE IT industry average (3x).

Future Growth

How is NEC forecast to perform in the next 1 to 3 years based on estimates from 12 analysts?

Future Growth Score

0/6

Future Growth Score 0/6

Earnings vs Savings Rate
Earnings vs Market
High Growth Earnings
Revenue vs Market
High Growth Revenue
Future ROE

-2.2%

Forecasted annual earnings growth

Earnings and Revenue Growth Forecasts

Analyst Future Growth Forecasts

Earnings vs Savings Rate: NEC1's earnings are forecast to decline over the next 3 years (-2.2% per year).

Earnings vs Market: NEC1's earnings are forecast to decline over the next 3 years (-2.2% per year).

High Growth Earnings: NEC1's earnings are forecast to decline over the next 3 years.

Revenue vs Market: NEC1's revenue (3.3% per year) is forecast to grow slower than the German market (5.4% per year).

High Growth Revenue: NEC1's revenue (3.3% per year) is forecast to grow slower than 20% per year.

Earnings per Share Growth Forecasts

Future Return on Equity

Future ROE: NEC1's Return on Equity is forecast to be low in 3 years time (9.3%).

Past Performance

How has NEC performed over the past 5 years?

Past Performance Score

2/6

Past Performance Score 2/6

Quality Earnings
Growing Profit Margin
Earnings Trend
Accelerating Growth
Earnings vs Industry
High ROE

32.7%

Historical annual earnings growth

Earnings and Revenue History

Quality Earnings: NEC1 has high quality earnings.

Growing Profit Margin: NEC1's current net profit margins (4.7%) are lower than last year (5%).

Past Earnings Growth Analysis

Earnings Trend: NEC1's earnings have grown significantly by 32.7% per year over the past 5 years.

Accelerating Growth: NEC1's has had negative earnings growth over the past year, so it can't be compared to its 5-year average.

Earnings vs Industry: NEC1 had negative earnings growth (-5.6%) over the past year, making it difficult to compare to the IT industry average (62.6%).

Return on Equity

High ROE: NEC1's Return on Equity (8.8%) is considered low.

Financial Health

How is NEC's financial position?

Financial Health Score

6/6

Financial Health Score 6/6

Short Term Liabilities
Long Term Liabilities
Debt Level
Reducing Debt
Debt Coverage
Interest Coverage

Financial Position Analysis

Short Term Liabilities: NEC1's short term assets (¥1,836.7B) exceed its short term liabilities (¥1,334.0B).

Long Term Liabilities: NEC1's short term assets (¥1,836.7B) exceed its long term liabilities (¥641.1B).

Debt to Equity History and Analysis

Debt Level: NEC1 has more cash than its total debt.

Reducing Debt: NEC1's debt to equity ratio has reduced from 57.4% to 24.9% over the past 5 years.

Debt Coverage: NEC1's debt is well covered by operating cash flow (33.2%).

Interest Coverage: NEC1 earns more interest than it pays, so coverage of interest payments is not a concern.

Balance Sheet

Dividend

What is NEC current dividend yield, its reliability and sustainability?

Dividend Score

3/6

Dividend Score 3/6

Notable Dividend
High Dividend
Stable Dividend
Growing Dividend
Earnings Coverage
Future Dividend Coverage

2.03%

Current Dividend Yield

Dividend Yield vs Market

Notable Dividend: NEC1's dividend (2.03%) is higher than the bottom 25% of dividend payers in the German market (1.35%).

High Dividend: NEC1's dividend (2.03%) is low compared to the top 25% of dividend payers in the German market (4.22%).

Stability and Growth of Payments

Stable Dividend: NEC1's dividend payments have been volatile in the past 10 years.

Growing Dividend: NEC1's dividend payments have increased over the past 10 years.

Earnings Payout to Shareholders

Earnings Coverage: With its low payout ratio (19.3%), NEC1's dividend payments are well covered by earnings.

Cash Payout to Shareholders

Cash Flow Coverage: With its reasonably low cash payout ratio (39.2%), NEC1's dividend payments are well covered by cash flows.

Next Steps

Explore strong dividend paying companies in the Software industry.

Management

How experienced are the management team and are they aligned to shareholders interests?

3.3yrs

Average management tenure

CEO

Takayuki Morita (61 yo)

1.08yrs

Tenure

Mr. Takayuki Morita serves as President and Chief Executive Officer at NEC Corporation since April 1, 2021. Mr. Morita served as Chief Financial Officer at NEC Corp. since June 25, 2018 until April 1, 2021...

Leadership Team

Experienced Management: NEC1's management team is considered experienced (3.3 years average tenure).

Board Members

Experienced Board: NEC1's board of directors are considered experienced (3.9 years average tenure).

Ownership

Who are the major shareholders and have insiders been buying or selling?

Insider Trading Volume

Insider Buying: Insufficient data to determine if insiders have bought more shares than they have sold in the past 3 months.

Ownership Breakdown

Dilution of Shares: Shareholders have not been meaningfully diluted in the past year.

Data	Last Updated (UTC time)
Company Analysis	2022/05/09 00:00
End of Day Share Price	2022/05/09 00:00
Earnings	2022/03/31
Annual Earnings	2022/03/31