TSE:6701

Stock Analysis Report

Executive Summary

NEC Corporation integrates computing and network technologies in Japan and internationally.


Snowflake Analysis

Undervalued with excellent balance sheet.


Similar Companies

Share Price & News

How has NEC's share price performed over time and what events caused price changes?


Latest Share Price and Events

Stable Share Price: 6701 has not had significant price volatility in the past 3 months.


Market Performance


7 Day Return

-0.4%

6701

-0.9%

JP IT

-1.7%

JP Market


1 Year Return

26.8%

6701

32.3%

JP IT

4.7%

JP Market

Return vs Industry: 6701 underperformed the JP IT industry which returned 32.3% over the past year.

Return vs Market: 6701 exceeded the JP Market which returned 4.7% over the past year.


Shareholder returns

6701IndustryMarket
7 Day-0.4%-0.9%-1.7%
30 Day-6.6%1.1%-3.1%
90 Day6.3%7.2%-1.5%
1 Year29.0%26.8%34.5%32.3%7.3%4.7%
3 Year81.6%71.3%88.5%79.4%17.2%9.3%
5 Year45.4%32.8%117.9%100.2%26.8%13.6%

Price Volatility Vs. Market

How volatile is NEC's share price compared to the market and industry in the last 5 years?


Simply Wall St News

No news available

Valuation

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

25.0%

Undervalued compared to fair value


Share Price vs. Fair Value

Below Fair Value: 6701 (¥4780) is trading below our estimate of fair value (¥6373.04)

Significantly Below Fair Value: 6701 is trading below fair value by more than 20%.


Price To Earnings Ratio

PE vs Industry: 6701 is good value based on its PE Ratio (15.2x) compared to the IT industry average (19.6x).

PE vs Market: 6701 is good value based on its PE Ratio (15.2x) compared to the JP market (15.3x).


Price to Earnings Growth Ratio

PEG Ratio: 6701 is poor value based on its PEG Ratio (1.4x)


Price to Book Ratio

PB vs Industry: 6701 is good value based on its PB Ratio (1.4x) compared to the JP IT industry average (2.7x).


Next Steps

Future Growth

How is NEC forecast to perform in the next 1 to 3 years based on estimates from 8 analysts?

11.1%

Forecasted annual earnings growth


Earnings and Revenue Growth Forecasts


Analyst Future Growth Forecasts

Earnings vs Savings Rate: 6701's forecast earnings growth (11.1% per year) is above the savings rate (-0.09%).

Earnings vs Market: 6701's earnings (11.1% per year) are forecast to grow faster than the JP market (9.8% per year).

High Growth Earnings: 6701's earnings are forecast to grow, but not significantly.

Revenue vs Market: 6701's revenue (1.5% per year) is forecast to grow slower than the JP market (3.5% per year).

High Growth Revenue: 6701's revenue (1.5% per year) is forecast to grow slower than 20% per year.


Earnings per Share Growth Forecasts


Future Return on Equity

Future ROE: 6701's Return on Equity is forecast to be low in 3 years time (10.1%).


Next Steps

Past Performance

How has NEC performed over the past 5 years?

-3.7%

Historical annual earnings growth


Earnings and Revenue History

Quality Earnings: 6701 has high quality earnings.

Growing Profit Margin: 6701's current net profit margins (2.7%) are higher than last year (1.2%).


Past Earnings Growth Analysis

Earnings Trend: 6701's earnings have declined by -3.7% per year over the past 5 years.

Accelerating Growth: 6701's earnings growth over the past year (127.4%) exceeds its 5-year average (-3.7% per year).

Earnings vs Industry: 6701 earnings growth over the past year (127.4%) exceeded the IT industry 20.5%.


Return on Equity

High ROE: 6701's Return on Equity (8.3%) is considered low.


Return on Assets


Return on Capital Employed


Next Steps

Financial Health

How is NEC's financial position?


Financial Position Analysis

Short Term Liabilities: 6701's short term assets (¥1,579.7B) exceed its short term liabilities (¥1,117.0B).

Long Term Liabilities: 6701's short term assets (¥1,579.7B) exceed its long term liabilities (¥833.9B).


Debt to Equity History and Analysis

Debt Level: 6701's debt to equity ratio (48.4%) is considered high.

Reducing Debt: 6701's debt to equity ratio has reduced from 79.7% to 48.4% over the past 5 years.

Debt Coverage: 6701's debt is well covered by operating cash flow (38.5%).

Interest Coverage: 6701's interest payments on its debt are well covered by EBIT (12.9x coverage).


Balance Sheet

Inventory Level: 6701 has a high level of physical assets or inventory.

Debt Coverage by Assets: 6701's debt is covered by short term assets (assets are 3x debt).


Next Steps

Dividend

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

1.26%

Current Dividend Yield


Upcoming Dividend Payment

TodayFeb 24 2020Ex Dividend DateMar 30 2020Dividend Pay DateJun 03 202065 days from Ex DividendBuy in the next 34 days to receive upcoming dividend

Dividend Yield vs Market

Notable Dividend: 6701's dividend (1.26%) isn’t notable compared to the bottom 25% of dividend payers in the JP market (1.39%).

High Dividend: 6701's dividend (1.26%) is low compared to the top 25% of dividend payers in the JP market (3.1%).


Stability and Growth of Payments

Stable Dividend: 6701's dividend payments have been volatile in the past 10 years.

Growing Dividend: 6701's dividend payments have increased over the past 10 years.


Current Payout to Shareholders

Dividend Coverage: With its low payout ratio (22.2%), 6701's dividend payments are well covered by earnings.


Future Payout to Shareholders

Future Dividend Coverage: Insufficient data to determine if a dividend will be paid in 3 years and that it will be covered by earnings.


Next Steps

Management

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

2.3yrs

Average management tenure


CEO

Takashi Niino (65yo)

3.8yrs

Tenure

JP¥119,000,000

Compensation

Mr. Takashi Niino has been Chief Executive Officer and President of NEC Corporation since April 2, 2016. Mr. Niino served as Senior Executive Vice President and Chief Information Officer of NEC Corporation ...


CEO Compensation Analysis

Compensation vs Market: Takashi's total compensation ($USD1.07M) is below average for companies of similar size in the JP market ($USD1.75M).

Compensation vs Earnings: Insufficient data to compare Takashi's compensation with company performance.


Leadership Team

NamePositionTenureCompensationOwnership
Takashi Niino
CEO, President & Representative Director3.8yrsJP¥119.00m0.0025% ¥31.0m
Takayuki Morita
Senior EVP3.7yrsno data0.00065% ¥8.1m
Motoo Nishihara
Executive VP0.7yrsno data0.00019% ¥2.4m
Hiroshi Kodama
Executive VP1.1yrsno datano data
Shinobu Obata
Senior VP2.8yrsno datano data
Makoto Enomoto
Senior VP & Chief Marketing Officer0yrsno datano data
Hajime Matsukura
Executive VP2.7yrsno data0.00073% ¥9.1m
Yukio Ito
Senior Vice President3.8yrsno datano data
Yasushi Teranishi
Head of Myanmar Offices6.5yrsno datano data
Masakazu Yamashina
Executive Vice President0yrsno datano data

2.3yrs

Average Tenure

58.5yo

Average Age

Experienced Management: 6701's management team is not considered experienced ( 1.8 years average tenure), which suggests a new team.


Board Members

NamePositionTenureCompensationOwnership
Takashi Niino
CEO, President & Representative Director3.8yrsJP¥119.00m0.0025% ¥31.0m
Takayuki Morita
Senior EVP3.7yrsno data0.00065% ¥8.1m
Motoo Nishihara
Executive VP0.7yrsno data0.00019% ¥2.4m
Hajime Matsukura
Executive VP2.7yrsno data0.00073% ¥9.1m
Norihiko Ishiguro
Senior EVP & Member of the Board1.7yrsno data0.0011% ¥14.3m
Takeshi Kunibe
Outside Director8.7yrsno datano data
Kaoru Seto
Independent Outside Director1.7yrsno datano data
Masatoshi Ito
Independent Outside Director0.7yrsno datano data
Nobuhiro Endo
Non Executive Chairman of the Board3.8yrsJP¥117.00m0.014% ¥173.0m
Noriko Iki
Independent Outside Director1.7yrsno datano data

2.2yrs

Average Tenure

64yo

Average Age

Experienced Board: 6701's board of directors are not considered experienced ( 2.2 years average tenure), which suggests a new board.


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.


Top Shareholders

Company Information

NEC Corporation's company bio, employee growth, exchange listings and data sources


Key Information

  • Name: NEC Corporation
  • Ticker: 6701
  • Exchange: TSE
  • Founded: 1899
  • Industry: IT Consulting and Other Services
  • Sector: Software
  • Market Cap: JP¥1.242t
  • Shares outstanding: 259.83m
  • Website: https://www.nec.com

Number of Employees


Location

  • NEC Corporation
  • 5-7-1, Shiba
  • Minato-ku
  • Tokyo
  • 108-8001
  • Japan

Listings

TickerExchangePrimary SecuritySecurity TypeCountryCurrencyListed on
NIPN.FOTCPK (Pink Sheets LLC)YesCommon StockUSUSDJan 1975
6701TSE (The Tokyo Stock Exchange)YesCommon StockJPJPYJan 1975
NEC1DB (Deutsche Boerse AG)YesCommon StockDEEURJan 1975

Biography

NEC Corporation integrates computing and network technologies in Japan and internationally. The company operates in five segments: Public, Enterprise, Network Services, System Platform, and Global. It provides systems integration services, such as systems implementation and consulting; maintenance and support services; outsourcing/cloud services; and system equipment. The company also provides network infrastructure products, including core network products, mobile phone base stations, optical transmission systems, and routers/switches; wireless LAN routers; and enterprise network solutions comprising IP telephony systems, WAN/wireless access equipment, and LAN products. In addition, it offers hardware products, such as servers, mainframes, supercomputers, storage products, business PCs, POS, ATMs, control equipment, and wireless LAN routers; software products, including integrated operation management, application servers, and security and database software; and maintenance services. Further, the company provides software services for service providers consisting of operation support system/business support system, software-defined networking, and network functions virtualization; submarine systems comprising submarine cable and ocean observation systems; wireless backhaul solutions; displays and projectors; and energy storage solutions. It serves aerospace, agriculture, aviation, broadcasting, government, hospitality, logistics, manufacturing, retail, telecom, and transportation industries. NEC Corporation has a strategic clinical trial collaboration agreement with VAXIMM to develop personalized neoantigen cancer vaccines. The company was formerly known as Nippon Electric Company, Limited and changed its name to NEC Corporation in April 1983. The company was founded in 1899 and is headquartered in Tokyo, Japan. 


Company Analysis and Financial Data Status

All financial data provided by Standard & Poor's Capital IQ.
DataLast Updated (UTC time)
Company Analysis2020/02/24 15:52
End of Day Share Price2020/02/21 00:00
Earnings2019/12/31
Annual Earnings2019/03/31


Unless specified all financial data is based on a yearly period but updated quarterly. This is known as Trailing Twelve Month (TTM) or Last Twelve Month (LTM) Data. Learn more here.