Nintendo (7974) Earnings: 1Q Operating Income Surpasses Estimates with 56.93 Billion Yen

Nintendo on Smartkarma

Analyst Coverage of Nintendo on Smartkarma

On Smartkarma, independent investment analyst Mark Chadwick‘s research on Nintendo (7974) paints a cautious picture. In his report titled “Next-Gen Switch 2 Meets Next-Level Margin Risk,” Chadwick highlights the potential impact of US import tariffs on Nintendo‘s profits. The looming tariff risks could erode hardware margins, leading to a significant hit on gross profit. With upcoming guidance on July 5, there is a possibility that expectations might not be met, with a bullish consensus eyeing ¥450bn in FY3/26 operating profit. Chadwick indicates that the recovery of FY3/27 earnings is contingent on easing tariff risks, with a potential rebound to ¥600bn if conditions normalize.

In another report by the same analyst titled “Nintendo: Switch 2 Can’t Come Soon Enough,” Chadwick discusses Nintendo‘s Q3 revenue and profit decline as the current Switch console nears the end of its cycle. Investors are eagerly awaiting the launch of the Switch 2 for possible growth opportunities. However, the report mentions that the Switch 2 is seen as an incremental upgrade that may not significantly expand the market or boost Nintendo‘s valuation beyond its current fair value of ¥9,000 per share. Despite the anticipation surrounding the new launch, the report suggests a cautious outlook on the potential upside for Nintendo in the near term.

A look at Nintendo Smart Scores

Smart Score is a compound score for the Company indicating its overall outlook. It is derived by taking an equally weighted average of underlying Factor scores computed by Smartkarma

Based on the Smartkarma Smart Scores, Nintendo has received a positive outlook for the long term. With high scores in Resilience and Momentum, the company seems well-equipped to withstand market fluctuations and maintain steady growth. While the Value, Dividend, and Growth scores are moderate, the strong performance in Resilience and Momentum suggests that Nintendo may be well-positioned for future success in the home entertainment industry.

Nintendo Co., Ltd. is a global leader in the development, manufacturing, and sale of home-use video game hardware and software, as well as home-game products like cards. With a focus on resilience and momentum, Nintendo appears to have a solid foundation for sustained growth in the long term, despite having average scores in other key areas. This indicates that Nintendo‘s strategic positioning and market presence could contribute to its success and stability over time.

Disclaimer: This article by Smartkarma is general in nature and based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. Note that our articles may not factor in the latest price-sensitive company announcements or qualitative material.
While all reasonable care has been taken in the preparation, Smartkarma makes no assurance about the accuracy of any generated data or content. All content is indicative only and should be independently checked for accuracy and confirmed before use. Smartkarma accepts no responsibility for any loss or damage caused as a result of any inaccuracy or error within the Lab online tools or generated data.
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