|
|
#1
06-23-2007, 02:54 AM
|
|||
|
|||
NTDOY, too much hoopla?
a recent article has posted that nintendo's market cap (around $52b or so) has passed matsushita's and is approaching sony's. does that strike anyone as being a bit ridiculous? is nintendo really worth 52 billion?
|
|
#2
06-23-2007, 11:53 AM
|
|||
|
|||
|
Re: NTDOY, too much hoopla?
According to Yahoo (which I wouldn't trust) a 30x PE, trading at $45.50 with a $1.35 EPS estimated by analysts.
Ben Graham had a formula that simplified doing discounted cash flow analysis. [ QUOTE ] V* = EPS (8.5 + 2g) 4.4 / Y Where: EPS : the company’s last 12-month earnings per share. g : the company’s long-term (five years) earnings growth estimate. 8.5 : the constant represents the appropriate P-E ratio for a no-growth company as proposed by Graham. 4.4 : the average yield of high-grade corporate bonds in 1962, when this model was introduced. Y : the current yield on AAA corporate bonds [/ QUOTE ] If I do the math right (and all our inputs are correct), Ben's formula says that at current prices Nintendo has an EPS growth rate expectation of 13.5% per year for the next 7-10 years. That doesn't seem unreasonable for me. Not cheap, and little margin of safety in a hit driven business like video games, but not unreasonable.
|
|
#4
06-23-2007, 02:44 PM
|
|||
|
|||
|
Re: NTDOY, too much hoopla?
[ QUOTE ]
maybe im out of the gaming loop but doesnt nintendo only make the 3rd most popular system now? Have they expanded into any other products? [/ QUOTE ] popular amongst gamers, but now nintendo was the only one to expand to a non-die-hard-gamer audience. Barron
|
|
#5
06-23-2007, 03:06 PM
|
|||
|
|||
|
Re: NTDOY, too much hoopla?
[ QUOTE ]
maybe im out of the gaming loop but doesnt nintendo only make the 3rd most popular system now? Have they expanded into any other products? [/ QUOTE ] According to this, the Nintendo Wii is outselling PS3 & XBox 360 combined by almost a 3-2 margin. The wii is much cheaper so that is part of the reason, but I think the expectation is that Nintendo will build a much larger installed base. This will create a greater volume of software sales and licensing fees, as well as provide big momentum for any Wii II, or as it will inevitably be known, the Wii-Wii 
|
|
#6
06-23-2007, 08:50 PM
|
|||
|
|||
|
Re: NTDOY, too much hoopla?
[ QUOTE ]
According to Yahoo (which I wouldn't trust) a 30x PE, trading at $45.50 with a $1.35 EPS estimated by analysts. Ben Graham had a formula that simplified doing discounted cash flow analysis. [ QUOTE ] V* = EPS (8.5 + 2g) 4.4 / Y Where: EPS : the company’s last 12-month earnings per share. g : the company’s long-term (five years) earnings growth estimate. 8.5 : the constant represents the appropriate P-E ratio for a no-growth company as proposed by Graham. 4.4 : the average yield of high-grade corporate bonds in 1962, when this model was introduced. Y : the current yield on AAA corporate bonds [/ QUOTE ] If I do the math right (and all our inputs are correct), Ben's formula says that at current prices Nintendo has an EPS growth rate expectation of 13.5% per year for the next 7-10 years. That doesn't seem unreasonable for me. Not cheap, and little margin of safety in a hit driven business like video games, but not unreasonable. [/ QUOTE ] hmmm, now plugging in the numbers, i guess it isn't that unreasonable. they've sold around 8 million base so far, and assuming it grows to 12 million by november of this year, they'll have made 50 (12m) = .6 billion by wii sales alone. they need 1.5 billion to meet that 1.35 a share mark, which i guess is achievable considering their DS sales and games. however, i don't know about a constant 13.5% growth rate of earnings, the video game industry can be very volatile. although the casual gamer won't be affected by it, sony's powerhouse franchises (final fantasy, metal gear solid, etc.) can put a dent in nintendo's earnings potential by the hardcore gamer market.
|
|
#7
06-25-2007, 11:46 AM
|
|||
|
|||
|
Re: NTDOY, too much hoopla?
|
|
#8
06-25-2007, 04:33 PM
|
|||
|
|||
|
Re: NTDOY, too much hoopla?
[ QUOTE ]
however, i don't know about a constant 13.5% growth rate of earnings, the video game industry can be very volatile. although the casual gamer won't be affected by it, sony's powerhouse franchises (final fantasy, metal gear solid, etc.) can put a dent in nintendo's earnings potential by the hardcore gamer market. [/ QUOTE ] It essentially demands quadrupling earnings over the next decade. If they double earnings in the next two years they can coast for the rest of the decade. If they grow EPS 20% next year it's still a long hard slog. One bad year and they are in trouble. That's why people get too excited about short term growth rates. My god, GOOG is growing 50% per year! That's got to be worth a 80 PE. Then one day you wake up and GOOG is growing at 20% per year, and that 80 PE gets cut in half. It happens to all of them, MSFT, etc. Nintendo is at special risk because it's a relatively mature business and they have a one time hit, so it's unclear how long that momentum can last.
|
|
#9
06-25-2007, 05:46 PM
|
|||
|
|||
|
Re: NTDOY, too much hoopla?
a good site to catch the latest sales figures:
http://nexgenwars.com/
|
|
#10
06-26-2007, 12:36 PM
|
|||
|
|||
|
Re: NTDOY, too much hoopla?
How is Sony structured? I can see how Nintendo would have a larger market cap than Sony based on the gaming industry, but what about the zillion other products that Sony makes? Is value from electronics, music and whatever else they sell built into the market cap of SNE?
|
 |
|
|
Linear Mode
