Toho Co., Ltd. (9602) : Overvalued relative to peers, but good fundamentals

Toho Co., Ltd. (9602) relative valuation is now OVERVALUED. It was previously rated UNDERVALUED, and has a fundamental analysis score of 75.

Our analysis is based on comparing Toho Co., Ltd. (9602) with the following peers – Movie Studio, Inc., Players Network, Point.360 and Spotlight Capital Holdings, Inc. (MVES-US, PNTV-US, PTSXQ-US and SLCH-US).

Relative Valuation

Toho Co., Ltd. (9602)’s price of USD 35.500 is greater than CapitalCube’s implied price of USD 23.10. At this level, CapitalCube believes that Toho Co., Ltd. (9602) is overvalued. Over the last 52 week period, the stock has fluctuated between USD 27 and USD 35.500.

Relative Valuation

Company Overview

  • Considering peers, relative outperformance over the last year and the last month suggest a leading position.
  • It’s current Price/Book of 2.18 is about median in its peer group.
  • TKCOF-US’s operating performance is relatively good compared to its peers. The market currently does not expect high earnings growth relative to its peers but seems to expect the company to maintain its relatively high rates of return.
  • TKCOF-US has a successful operating model with relatively high net profit margins and asset turns.
  • Compared with its chosen peers, changes in the company’s annual earnings are better than the changes in its revenue, implying better than median cost control and/or some economies of scale.
  • TKCOF-US’s return on assets currently and over the past five years suggest that its relatively high operating returns are sustainable.
  • While TKCOF-US’s revenues growth has been below the peer median in the last few years, the market still gives the stock a P/E ratio that is around peer median and seems to see the company as a long-term strategic bet.
  • The company’s level of capital investment suggests it might be under-investing in a business with above median returns.

Investment Outlook

Toho Co., Ltd. (9602) has a fundamental score of 75 and has a relative valuation of OVERVALUED.

Toho Co., Ltd. (9602) appears on the top right hand quadrant of CapitalCube’s Value – Price Matrix. We classify this as ‘Safety’. In other words, Toho Co., Ltd. (9602) has a relatively high Fundamental Analysis score of 75, while being potentially overvalued and trading higher than its CapitalCube Implied Price of 23.10. There might be some safety in this stock where it’s fundamental strength perhaps justifies its relatively higher price.

Fundamentals Vs Relative Valuation

Quadrant label definitions. Hover to know more

Safety, Value Play, Value Trap, Speculative

Drivers of Valuation

The market seems to expect TKCOF-US to maintain its relatively high returns.

TKCOF-US’s operating performance is higher than the median of its chosen peers (ROE of 12.00% compared to the peer median ROE of -33.36%) but the market does not seem to expect higher growth relative to peers (P/E of 18.63 compared to peer median of 18.63) but simply to maintain its relatively high rates of return.

The company’s current Price/Book of 2.18 is about median in its peer group.

Valuation Drivers

Quadrant label definitions. Hover to know more

Outperforming, Harvesting, Challenged, Turnaround

TKCOF-US has maintained its relatively high ROE profile from the recent year-end.

ROE % (On Common Equity)
Price To Earnings

Peer Analysis

A complete list of valuation metrics is available on the company page.

Company Profile

Toho Co., Ltd. engages in film and theater production. It operates through the following segments: Movie Film, Theater, Real Estate, and Others. The Movie Film segment produces, distributes, and exhibits movies; and creates and sells video programs, television programs, and commercial films. The Theater segment produces, presents, and sells theatrical works; and manages talent agencies. The Real Estate segment leases, maintains, and manages properties; and provides road maintenance and repair services. The Others segment operates restaurants, recreational, and sports facilities. The company was founded by Ichizo Kobayashi on August 12, 1932 and is headquartered in Tokyo, Japan.

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