Bull of the Day: Nintendo (NTDOY) - Bull of the Day

While interest rates and energy look to dominate the headlines in 2015, another top story for the year looks to be the rising fortunes for the consumer sector. Lower oil prices , rising home values, and a better jobs situation all look to combine to make consumers feel more confident in their economic situations, and thus more likely to spend as well. 

These trends look to make for a great year for the video game space, as this ultra-discretionary industry was already seeing a solid growth track, even with the previous lackluster economic environment. After all, the video game world has been growing at a rate roughly four times as fast as the U.S. economy, and with a better economic environment it seems reasonable to assume that the trend will continue this year as well. 

Fortunately for investors, there are a number of choices in the video game space, and most of which appear to be interesting plays for 2015, thanks to a high industry rank for the segment. However, arguably the best way to tap into this growth potential is by taking a closer look at one of the leaders in the video game industry, Nintendo. 

Nintendo in Focus 

Nintendo is probably best known for its lineup of great characters and titles which are among the longest running franchises in the video game world. These include ultra-popular names like Mario , Pokémon or the Legend of Zelda series, titles which generally accompany any of the company's latest system releases. 

The company also made a huge splash a few years ago with the launch of its novel platform, the Wii . This console relied on controllers that sensed motion and it was a huge hit for NTDOY, becoming the best selling console for the company in its history. 

The company decided to follow up the Wii with the Wii U in 2012, though this has seen much less interest when compared to its predecessor. Sales haven't been great for the software either, putting Nintendo in a precarious position when compared to the successes of its main competitors, Sony and Microsoft. 

Thanks to these sluggish sales, NTDOY stock has been a recent underperformer. Shares of the company are basically flat over the past two years, easily trailing broad benchmarks in the process. However, as we start the New Year, things are looking up for Nintendo and this could be a turnaround time for the company. 

Better Days Ahead? 

Nintendo is starting to see sales for its consoles and games perk up, and this is largely thanks to some very popular titles. The latest Mario Kart and Super Smash Bros. are drawing more interest into the Wii U platform, and are continuing their popularity from previous editions from old systems. 

2015 looks to continue this trend of popular game franchises and this could really drive sales for the Wii U and software in the next few months. Coming ahead are titles such as Mario Party 10 , Star Fox , and the Legend of Zelda , and these look likely to pull in more gamers into the Wii U ecosystem, potentially making this year an exceptional one for NTDOY. 

Analysts agree with this sentiment too, as they have been furiously raising estimates as of late in anticipation of a solid year ahead for NTDOY. In fact, analysts are looking for EPS growth of 268% for 2015 and a move back to profitability as well. 

Estimates (for the full 2015 period) have actually moved from a 13 cent loss per share 90 days ago, to an eight cent gain 30 days ago, to their current impressive level at 27 cents a share today. Investors have also seen a positive trend for the next year time frame too, suggesting that Nintendo is starting to get on the right track. 

The company is also crushing estimates at earnings season so there should be little worry about NTDOY meeting lofty expectations. NTDOY has actually beaten estimates by an average of 436% in the past four quarters, including an 800% beat in the previous quarter. 

 

Bottom Line 

Thanks to the impressive turnaround potential at Nintendo and the strong earnings estimate revisions we are seeing for the stock right now, we have given NTDOY a Zacks Rank #1 (Strong Buy), and are looking for outperformance ahead for the stock. It also doesn't hurt that NTDOY finds itself in a very highly ranked industry, suggesting that the broader trend is this stock's friend right now too. 

So if you are looking for a way to play the consumer sector that isn't already bid up to extreme heights, make sure to consider Nintendo. The company is poised to release a number of historically popular titles within the next few months and this could provide the stock with the boost it needs to finally get out of the doldrums and become a top performer once more. 


It does seem interesting to me though, that a large reason for recommending Nintendo stocks is the health of the overall videogame industry. Strength that many credit Sony with, yet Sony is a 'Hold' recommendation.

Please note: I don't believe anybody actually knows what the hell is going on with the stock market, so I certainly wouldn't recommend buying Nintendo shares based on this article.

Do you think Nintendo shares are set to take off? Why?/Why not? 

Read more: http://www.nasdaq.com/article/bull-of-the-day-nintendo-ntdoy-bull-of-the-day-cm429249#ixzz3O1o3OJZ9

Well, with the success of amiibo, I think Nintendo will certainly make money so yea, maybe the stock will go up, but not dramatically imo

Nintendo is a safer buy than Sony due to Sony's other issues. And Nintendo is an efficient company on the way to an annual profit and their fortunes as a business are trending up. That's really all there is to it from an investor's standpoint. When you look at these sorts of things, predictions are worthless, you can really just look at short and long term potential and Nintendo has strong potential going into 2015

That is not that hard to see why..

1. Starting to make profit on homeconsoles.

2. Best seller (by large) of protable consolles in the world

3. Best known ip in a ever croving "casual" video market

4. About to start a new product (health is the new buzz word)

5. About to enter the chiness marked

And also the fact that the share value at this moment is low.. And could potentionel go up by much as 400%.. if Nintendo hit jackpot with chiness marked, new producs/ console/ games .. Nintendo phone.. or other.

(Sony is to big, and in to poor position, for the ps4 to do the same.. and on top of that we know they have very big dept, and a lot of "negativ vipes" in the company.. selling of things.. fyring.. and cut the company all the time last 5 years)

The industry's trend effect Nintendo much more than Sony, as Sony has another business ventures while Nintendon't.

Nintendo's stock is likely undervalued, considering the performance in the handheld market, so it's rather easy to see Nintendo being recommended as "buy".

Stockmarket itself work more with potential and momentum than real world performance. If you get more money for your stock tomorrow than today, you should buy, and if the stock is more expensive tomorrow than it is today, you shold buy. And vice versa; cheaper tomorrow, sell.

Yes, as stated, Nintendo is the only major corporation that basically solely relies on the state of the gaming industry. Sony and Microsoft only have one department each that relies on the gaming industry so making decisions on said industry in buying their stocks would be pretty dumb.

That being said, since Nintendo is faring the worst in the industry space right now, I don't think it's necessarily a good time now either. It could go either way. It is a risky purchase because their survival as a major corporation and not devolving into a major publisher only depends largely on how their next console fares. If it does well, even entering a solid competition, then they are undervalued right now. If it's another gimmicky, expensive, and under-marketed failure then you'd be throwing your money away.

So their logic that a company relying on the success of the gaming industry should do well in a bull gaming industry market may make since. But the two do not necessarily correlate since the reason the market is exploding right now is largely due to the efforts of the original Wii and the quality that the other consoles are putting out. Think about the 5th console generation for an example. The industry had a major growth spurt with the introduction of the PS1 and the N64. But Sega did really poorly during that generation and their stocks plummeted thanks to the myriad mistakes on the Saturn that caused it to sell less than 10 million units in the generation. Now, they were in a very similar position to the WiiU. People could have easily said that since the gaming market was so strong that Sega was a great buy in a bull market. Had the dreamcast blown up in sales, that would have been true but I think everyone here knows what happened.

The WiiU is doing marginally better than they did last year this time. But so is every other platform. In 2013 they only sold 3.1 million units and so far with the numbers we have going into December they've only reached 3.2 million units. Compare this to the PS4 that has sold 13.8 million units this year so far and the XBO that has sold 7.6 million.

This isn't a growing explosive brand that is taking advantage of the bull market. This is a stagnating produc that isn't even likely to have had a 25% increase in sales this year.

So, which company would I invest in for the gaming industry? None of them. But especially not Nintendo. If the next console they announce has buzz behind it, I'd consider investing then. But sure as hell not now.

^Umm... Downsizing and becoming an independent publisher is an option that could boost the syock value and lead ti bigger profits, so I don't think the market would see that as a bad option. A little more than decade ago analysts kept ranting Nintendo going 3rd party which was based on the potential of bigger sales.

Now with New 3DS on it's way, Nintendo have removed certain doubt on what they're going to do next, making Nintendo a safer buy. It's likely the N3DS is going to be cheaper by design than 3DS, being a more profitable console.

All I see is a pump and dump article.
Nintendo isn't a 'leader' and the cheap oil prices are going to do more harm than good.
So don't believe in this article if you ask me.

Let me just throw around this prediction: In 4-6 months the media/market analysts will be back at dooming Nintendo. Especially if their only reason for projecting good years for Nintendo is the growth of the game industry, of which Nintendo is actually experiencing nothing at the moment.

The article stated "one of the leaders of the industry". Roughly stated the industry today consists of a handful of big players and a shitload of small ones (virtually there's nothing in between anymore). If you are one of the big ones, you are "one of the leaders".

How come cheap oil hurt more than help? Cheaper shipping costs and cheaper cost of manufacture due to cheaper energy and cheaper plastic is only going to leave more money into Nintendo's pocket as far as I'm aware.