NEC Corporation's shares display attractive technical aspects to anticipate a comeback of the underlying trend.
Summary
● Overall, and from a short-term perspective, the company presents an interesting fundamental situation.
● According to Refinitiv, the company's ESG score for its industry is good.
Strengths
● The stock, which is currently worth 2022 to 0.59 times its sales, is clearly overvalued in comparison with peers.
● The company's share price in relation to its net book value makes it look relatively cheap.
● Given the positive cash flows generated by its business, the company's valuation level is an asset.
Weaknesses
● As estimated by analysts, this group is among those businesses with the lowest growth prospects.
● The company's currently anticipated earnings per share (EPS) growth for the next few years is a notable weakness.
● As a percentage of sales and without taking into account depreciation and amortization, the company has relatively low margins.
● The company does not generate enough profits, which is an alarming weak point.
● For the last 12 months, analysts have been regularly downgrading their EPS expectations. Analysts predict worse results for the company against their predictions a year ago.
● The price targets of analysts who cover the stock differ significantly. This implies difficulties in evaluating the company and its business.
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NEC Corporation specializes in the manufacturing and marketing computing and telecommunication equipments. Net sales break down by activity as follows:
- IT services (53.9%): integration, maintenance, outsourcing, support services, etc.;
- sale of IT infrastructure products and network systems (17%). In addition, the group provides network services;
- sale of digital government and financial services software (14.9%);
- other (12.7%): sale of hardware, mobile telephones, lighting products, energy management and storage systems, etc.
Net sales are distributed geographically as follows: Japan (75%), Asia/Pacific (11.2%), Europe/Middle East/Africa (9.8%) and Americas (4%).