Yahoo Finance Do Nintendo Shares Deserve Investors' Attention Pre-Split?
While the majority of market headlines in 2022 have been negative, several companies have announced shareholder-friendly moves, such as stock splits from the almighty Tesla TSLA and Palo Alto Networks PANW.
Stock splits are always an exciting development. Of course, a split doesn’t affect a company’s market capitalization.
However, it lowers the value of each share, providing ease for the stock price to multiply once again and provide investors with sizable gains.
And there’s another upcoming stock split that investors shouldn’t ignore.
Nintendo NTDOY, a worldwide leader in game development and publishing, announced a 10-for-1 stock split slated to take place over the weekend of October 1st, 2022.
It raises a valid question, are Nintendo shares worth a look pre-split, or should investors proceed with caution? Let’s take a closer look.
Price Action & Quarterly Performance
Year-to-date, NTDOY shares have been visibly defensive, declining roughly 9% and widely outperforming the general market.
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Over the last month, Nintendo shares have continued on their market-beating trajectory, declining nearly 2% and outperforming the S&P 500’s 6% decrease.
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The favorable price action that NTDOY shares have enjoyed lets us know that market participants have defended the stock at a higher level than most, definitely a positive in 2022.
The company is also on a blazing earnings streak – NTDOY has exceeded the Zacks Consensus EPS Estimate in 11 consecutive quarters.
Top line results have also been strong, with the gaming giant penciling in eight revenue beats across its last ten quarters.
Below is a chart illustrating the company’s revenue on a quarterly basis.
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Valuation & Growth Outlook
Currently, NTDOY carries a 15.5X forward earnings multiple, well below its five-year median of 20.1X and representing a solid 28% discount relative to its Zacks Consumer Discretionary Sector.
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In addition, the gaming giant possesses a Style Score of a C for Value.
Nintendo’s earnings outlook has turned sour over the last several months, with analysts lowering their bottom-line outlook across several timeframes. This is further displayed by its Zacks Rank #4 (Sell).
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The company is forecasted to register Y/Y earnings growth of 5.5% for its upcoming quarter, but annual projections allude to a steep 23% year-over-year decline for FY23.
Further, the company’s top line is also undergoing some turbulence, with revenue forecasted to decline nearly 14% in FY23.
Dividends
Dividends are always a massive perk. Simply put, few things in life are sweeter than your investments paying you, and NTDOY does precisely that.
NTDOY’s annual dividend yields a steep 3.9%, massively higher than its Zacks Consumer Discretionary Sector average of 0.9%.
In addition, the company has impressively upped its dividend payout seven times over the last five years, with a jaw-dropping 37% five-year annualized dividend growth rate.
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Bottom Line
While the stock split can undoubtedly breathe new life into shares with increased liquidity, the company’s near-term outlook appears a bit dim, and investors should heed caution. This is displayed to us by its Zacks Rank #4 (Sell).
Instead, for investors looking to get in on some stock split action, Tesla TSLA appears to be currently better positioned.
Analysts have raised their earnings outlook notably across nearly all timeframes over the last several months, pushing the stock into a favorable Zacks Rank #2 (Buy).
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Further, the EV titan carries a strong growth profile, with earnings and revenue forecasted to soar nearly 80% and 50% in FY22, respectively.
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Palo Alto Networks PANW could also interest those looking for a stock split play. PANW rocks a Zacks Rank #3 (Hold) paired with an overall VGM Score of a B.
Like Tesla, PANW has a favorable growth profile; earnings are forecasted to soar 25% in FY23, and revenue is projected to climb a double-digit 25%.
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