Nitto Denko Corporation primarily engages in the adhesive tapes business in Japan and internationally. It provides double sided tapes, surface protective films, sealing materials/NVH related products, masking tapes, membranes, FPD/touch panel related products, gasket materials, semiconductor manufacturing process products, flexible printed circuit boards, porous films/breathable materials, and packaging tapes. The company also offers functional thermal transfer systems, such as labels, barcode label printers, and label printing software; tapes for electrical and electronic equipment; dust removal products for clean rooms; fluoroplastic sheets and tapes, and fluoroplastic porous films; and materials for housing and construction, as well as packaging machines. In addition, it provides medical products, including transdermal therapeutic systems, athletic tapes, medical adhesive tapes for wearable devices and body sensors, adhesive tapes, and particles for nucleic acid synthesis. This week, I fundamentally analyze Nitto Denko’s stock. I review Nitto Denko’s business, look at its key ratios, and derive the intrinsic value using Discounted Cash Flow (DCF) analysis. Since this is a long video, please feel free to use the time stamps in the video if you only wish to watch certain topics.
I review various key ratios such as Revenue, Net Income, Shares outstanding, Dividends, Payout Ratio, Free Cash Flows (FCF), Financial Leverage, Current Ratio, Debt to Equity Ratio, Return on Equity (ROE), Days Sales Outstanding (DSO), Days Inventory, Payable Period, Cash Conversion Cycle, Inventory Turnover, etc.
After taking into account Trailing Twelve Month’s free cash flow of $651 million figure, a 7% growth rate of FCF (growth for the next 10 years), 10% discount rate, 3% long term growth rate (growth from 10 year mark to perpetuity), 296 million shares outstanding, and $176 million of other long term liabilities, the DCF analysis yields us an intrinsic value of $42.26 per share.
0:00 Introduction / Business Overview
1:49 Key Ratios Analysis
11:04 Discounted Cash Flow Analysis / Intrinsic Value
Nitto Denko’s Website: here
Morningstar Key Ratios Link: here.
Useful Resources here.
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