Published , by Captain Business
Published , by Captain Business
Hey hey hey, kiddos! It's your ole pal, Captain Business here with some late night news. Nintendo is out with their Q1 2022 financial results, and they have surprised some shareholders with a nearly $1 billion share buyback.
Here is the full statement directly from Nintendo's investor relations page.
Nintendo said the reason for the buyback is to, "Implement a flexible capital policy in accordance with changes in the business environment and provide shareholder returns as part of our shareholder return policy." It's hard not to think the company is sending a message to the market that they feel the stock is cheap. When you look at it relative to its competitors or other media companies, there is not much of a premium being given to Nintendo's track record and intellectual property with a trailing and forward P/E ratio in the teens.
Then again, Nintendo is facing a down year, and this quarter's results showed that. The company spoke to these tough year-over-year comparisons in their Q1 2022 earnings release: "Hardware and software sales in the first quarter of last fiscal year were substantially driven by the March 2020 release of Animal Crossing: New Horizons, so compared to then, hardware sales were down 21.7% and software sales were down 10.2% year-on-year."
As for the exact amount of the buyback, the company put some limits to the program. Nintendo (NTDOY) can buyback up to 1,800,000 shares (1.51% of the outstanding shares). They also capped the buyback to 100,000,000,000 yen, which is about $911 million at the time this article went live. Bow howdy, that's a lot of bananas!
With revenues and earnings facing down years, it is nice of Nintendo to reward shareholders with this unexpected buyback. The company will be buying the shares at market prices starting August 6, 2021 and ending September 15, 2021. The Switch did top 89 million units sold since launch, which still keeps it on pace to pass the Wii sometime during this fiscal year. We'll keep our eye on the Big N when the stock opens tomorrow in the good ole United Staes of America, but it is currently trading slightly up in Germany.
This article is only meant for educational purposes, and should not be taken as investment advice. Please consider your own investment time horizon, risk tolerance, and consult with a financial advisor before acting on this information.