Murata Manufacturing (TSE:6981) - Share price, News & Analysis

Q: What is the Fair Price of 6981 when looking at its future cash flows? For this estimate we use a Discounted Cash Flow model.

6981 (¥7885) is trading below our estimate of [[fair value]] (¥12090.26)

6981 fundamental analysis
Snowflake Score
Valuation	4/6
Future Growth	2/6
Past Performance	4/6
Financial Health	5/6
Dividends	5/6

6981 Stock Overview

Murata Manufacturing Co., Ltd. designs, manufactures, and sells ceramic-based passive electronic components and solutions in Japan and internationally.

Rewards

Trading at 34.8% below our estimate of its fair value

Earnings are forecast to grow 7.16% per year

Earnings have grown 15% per year over the past 5 years

Pays a reliable dividend of 1.9%

Risk Analysis

No risks detected for 6981 from our risk checks.

Murata Manufacturing Competitors

Kyocera

TSE:6971

JP¥2.7t

TDK

TSE:6762

JP¥1.6t

OMRON

TSE:6645

JP¥1.4t

Hamamatsu Photonics K.K

TSE:6965

JP¥857.8b

Price History & Performance

Summary of all time highs, changes and price drops for Murata Manufacturing
Historical stock prices
Current Share Price	JP¥7,885.00
52 Week High	JP¥10,535.00
52 Week Low	JP¥7,008.00
Beta	0.87
1 Month Change	-4.39%
3 Month Change	-2.86%
1 Year Change	-7.04%
3 Year Change	58.78%
5 Year Change	39.72%
Change since IPO	229.46%

Shareholder Returns

	6981	JP Electronic	JP Market
7D	2.7%	1.1%	1.8%
1Y	-7.0%	-8.5%	-4.7%

Return vs Industry: 6981 exceeded the JP Electronic industry which returned -8.5% over the past year.

Return vs Market: 6981 underperformed the JP Market which returned -4.7% over the past year.

Price Volatility

Is 6981's price volatile compared to industry and market?
6981 volatility
6981 Average Weekly Movement	4.0%
Electronic Industry Average Movement	4.5%
Market Average Movement	4.2%
10% most volatile stocks in JP Market	8.5%
10% least volatile stocks in JP Market	2.3%

Stable Share Price: 6981 is not significantly more volatile than the rest of JP stocks over the past 3 months, typically moving +/- 4% a week.

Volatility Over Time: 6981's weekly volatility (4%) has been stable over the past year.

About the Company

Founded	Employees	CEO	Website
1944	77,581	Norio Nakajima	https://www.murata.com

Murata Manufacturing Co., Ltd. designs, manufactures, and sells ceramic-based passive electronic components and solutions in Japan and internationally. It operates through Components, Modules, and Others segments. The company offers capacitors, inductors, noise suppression products/EMI suppression filters/ESD protection devices, resistors, thermistors, sensors, timing devices, quartz devices, sound components, power products, batteries, micro mechatronics, RFID devices, matching devices, baluns, couplers, filters, phase shifters, RF switches, front-end modules, SAW components, connectors, antennas, connectivity modules, wireless connectivity platforms, ionizers/active oxygen modules, and transformers.

Murata Manufacturing Fundamentals Summary

How do Murata Manufacturing's earnings and revenue compare to its market cap?
6981 fundamental statistics
Market Cap	JP¥5.02t
Earnings (TTM)	JP¥314.12b
Revenue (TTM)	JP¥1.81t

16.0x

P/E Ratio

2.8x

P/S Ratio

Is 6981 overvalued?

See Fair Value and valuation analysis

Earnings & Revenue

Key profitability statistics from the latest earnings report
6981 income statement (TTM)
Revenue	JP¥1.81t
Cost of Revenue	JP¥1.04t
Gross Profit	JP¥768.23b
Other Expenses	JP¥454.11b
Earnings	JP¥314.12b

Last Reported Earnings

Mar 31, 2022

Next Earnings Date

Jul 28, 2022

Earnings per share (EPS)	493.25
Gross Margin	42.38%
Net Profit Margin	17.33%
Debt/Equity Ratio	4.9%

How did 6981 perform over the long term?

See historical performance and comparison

Dividends

1.9%

Current Dividend Yield

26%

Payout Ratio

We’ve recently updated our valuation analysis.

Valuation

Is 6981 undervalued compared to its fair value, analyst forecasts and its price relative to the market?

Valuation Score

4/6

Valuation Score 4/6

Price-To-Earnings vs Peers
Price-To-Earnings vs Industry
Price-To-Earnings vs Fair Ratio
Below Fair Value
Significantly Below Fair Value
PEG Ratio

Key Valuation Metric

Which metric is best to use when looking at relative valuation for 6981?

Other financial metrics that can be useful for relative valuation.

The above table shows the n/a ratio for 6981. This is calculated by dividing 6981's market cap by their current preferred multiple.
What is 6981's n/a Ratio?
n/a Ratio	0x
n/a	n/a
Market Cap	JP¥5.02t

6981 key valuation metrics and ratios. From Price to Earnings, Price to Sales and Price to Book to Price to Earnings Growth Ratio, Enterprise Value and EBITDA.
Key Statistics
Enterprise Value/Revenue	2.5x
Enterprise Value/EBITDA	7.9x
PEG Ratio	2.2x

Price to Earnings Ratio vs Peers

How does 6981's PE Ratio compare to its peers?

6981 PE Ratio vs Peers

The above table shows the PE ratio for 6981 vs its peers. Here we also display the market cap and forecasted growth for additional consideration.
Company	PE	Estimated Growth	Market Cap
Peer Average	18.6x
6971 Kyocera	17.9x	6.3%	JP¥2.7t
6762 TDK	9.3x	-0.4%	JP¥1.6t
6645 OMRON	23x	8.7%	JP¥1.4t
6965 Hamamatsu Photonics K.K	24.1x	5.1%	JP¥857.8b
6981 Murata Manufacturing	16x	7.2%	JP¥5.0t

Forward PE

Price-To-Earnings vs Peers: 6981 is good value based on its Price-To-Earnings Ratio (16x) compared to the peer average (18.6x).

Price to Earnings Ratio vs Industry

How does 6981's PE Ratio compare vs other companies in the JP Electronic Industry?

Price-To-Earnings vs Industry: 6981 is expensive based on its Price-To-Earnings Ratio (16x) compared to the JP Electronic industry average (11.2x)

Price to Earnings Ratio vs Fair Ratio

What is 6981's PE Ratio compared to its Fair PE Ratio? This is the expected PE Ratio taking into account the company's forecast earnings growth, profit margins and other risk factors.

6981 PE Ratio vs Fair Ratio.
Fair Ratio
Current PE Ratio	16x
Fair PE Ratio	17.1x

Price-To-Earnings vs Fair Ratio: 6981 is good value based on its Price-To-Earnings Ratio (16x) compared to the estimated Fair Price-To-Earnings Ratio (17.1x).

Share Price vs Fair Value

What is the Fair Price of 6981 when looking at its future cash flows? For this estimate we use a Discounted Cash Flow model.

Below Fair Value: 6981 (¥7885) is trading below our estimate of fair value (¥12090.26)

Significantly Below Fair Value: 6981 is trading below fair value by more than 20%.

Price to Earnings Growth Ratio

PEG Ratio: 6981 is poor value based on its PEG Ratio (2.2x)

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Future Growth

How is Murata Manufacturing forecast to perform in the next 1 to 3 years based on estimates from 18 analysts?

Future Growth Score

2/6

Future Growth Score 2/6

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

7.2%

Forecasted annual earnings growth

Earnings and Revenue Growth Forecasts

Analyst Future Growth Forecasts

Earnings vs Savings Rate: 6981's forecast earnings growth (7.2% per year) is above the savings rate (0.02%).

Earnings vs Market: 6981's earnings (7.2% per year) are forecast to grow slower than the JP market (8.9% per year).

High Growth Earnings: 6981's earnings are forecast to grow, but not significantly.

Revenue vs Market: 6981's revenue (5.4% per year) is forecast to grow faster than the JP market (4.5% per year).

High Growth Revenue: 6981's revenue (5.4% per year) is forecast to grow slower than 20% per year.

Earnings per Share Growth Forecasts

Future Return on Equity

Future ROE: 6981's Return on Equity is forecast to be low in 3 years time (14.1%).

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Past Performance

How has Murata Manufacturing performed over the past 5 years?

Past Performance Score

4/6

Past Performance Score 4/6

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

15.0%

Historical annual earnings growth

Earnings and Revenue History

Quality Earnings: 6981 has high quality earnings.

Growing Profit Margin: 6981's current net profit margins (17.3%) are higher than last year (14.5%).

Past Earnings Growth Analysis

Earnings Trend: 6981's earnings have grown by 15% per year over the past 5 years.

Accelerating Growth: 6981's earnings growth over the past year (32.5%) exceeds its 5-year average (15% per year).

Earnings vs Industry: 6981 earnings growth over the past year (32.5%) underperformed the Electronic industry 46%.

Return on Equity

High ROE: 6981's Return on Equity (13.9%) is considered low.

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Financial Health

How is Murata Manufacturing's financial position?

Financial Health Score

5/6

Financial Health Score 5/6

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

Financial Position Analysis

Short Term Liabilities: 6981's short term assets (¥1,435.2B) exceed its short term liabilities (¥321.3B).

Long Term Liabilities: 6981's short term assets (¥1,435.2B) exceed its long term liabilities (¥224.0B).

Debt to Equity History and Analysis

Debt Level: 6981 has more cash than its total debt.

Reducing Debt: 6981's debt to equity ratio has increased from 3.4% to 4.9% over the past 5 years.

Debt Coverage: 6981's debt is well covered by operating cash flow (379.8%).

Interest Coverage: 6981 earns more interest than it pays, so coverage of interest payments is not a concern.

Balance Sheet

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Dividend

What is Murata Manufacturing current dividend yield, its reliability and sustainability?

Dividend Score

4/6

Dividend Score 4/6

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

1.90%

Current Dividend Yield

Dividend Yield vs Market

Notable Dividend: 6981's dividend (1.9%) is higher than the bottom 25% of dividend payers in the JP market (1.67%).

High Dividend: 6981's dividend (1.9%) is low compared to the top 25% of dividend payers in the JP market (3.71%).

Stability and Growth of Payments

Stable Dividend: 6981's dividends per share have been stable in the past 10 years.

Growing Dividend: 6981's dividend payments have increased over the past 10 years.

Earnings Payout to Shareholders

Earnings Coverage: With its reasonably low payout ratio (26.5%), 6981's dividend payments are well covered by earnings.

Cash Payout to Shareholders

Cash Flow Coverage: With its reasonably low cash payout ratio (35.3%), 6981's dividend payments are well covered by cash flows.

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Management

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

4.2yrs

Average management tenure

CEO

Norio Nakajima (61 yo)

2yrs

Tenure

Mr. Norio Nakajima has been President at Murata Manufacturing Co., Ltd. since June 2020. He served as Senior Executive Vice President at Murata Manufacturing Co., Ltd.since June 29, 2017 until June 2020 a...

Leadership Team

Experienced Management: 6981's management team is considered experienced (4.2 years average tenure).

Board Members

Experienced Board: 6981's board of directors are considered experienced (4 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	2022/06/28 00:00
End of Day Share Price	2022/06/28 00:00
Earnings	2022/03/31
Annual Earnings	2022/03/31