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Murata Manufacturing Co Ltd 6981

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Upgrading Murata Manufacturing to a Wide Moat Based on Expanding Advantage in MLCCs

Kazunori Ito

Murata Manufacturing is a top supplier of passive components, such as the multilayer ceramic capacitor, or MLCC (40% global share), and surface acoustic wave, or SAW, filters (40%-45% global share). While we acknowledge that shipments of digital devices are slowing down, we believe progress in telecommunications technology will be the driver to increase content per device.

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Price vs Fair Value

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6981 is trading within a range we consider fairly valued.
Price
¥‎2,797.00
Fair Value
¥‎9,416.00
Uncertainty
Medium
1-Star Price
¥‎8,842.00
5-Star Price
¥‎8,755.00
Economic Moat
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Capital Allocation
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Bulls Say, Bears Say

Bulls

Murata will benefit from increasing passive components demand per phone, as a result of advancing technology in telecommunications. In particular, diffusion of LTE and LTE-advanced networks will be the driver.

Bears

The average pricing of smartphones has been gradually decreasing since 2012 and the profitability of handset makers is declining as a result. Consequently, the price-cut pressure for components will strengthen.

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Trading Information

Previous Close Price
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Day Range
—–—
52-Week Range
—–—
Bid/Ask
— / —
Market Cap
—
Volume/Avg
— / —

Key Statistics

Price/Earnings (Normalized)
25.53
Price/Sales
3.12
Dividend Yield (Trailing)
1.93%
Dividend Yield (Forward)
1.93%
Total Yield
2.89%

Company Profile

Murata Manufacturing produces passive components for electronic devices. Passive components are necessary for all electronic circuits, used to enable wireless communication, store electricity and handle electric flow, remove electromagnetic noise from circuits, and so on. Thus, passive components are imperative for electronic circuits. For instance, one high-end smartphone contains more than 1,000 passive components. Murata Manufacturing is the global top passive components supplier with 40% market share on MLCC and SAW filters.
Sector
Technology
Industry
Electronic Components
Stock Style Box
Large Growth
Total Number of Employees
73,164
Website
http://www.murata.co.jp

Competitors

Valuation

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Metric
6981
6976
2327
Price/Earnings (Normalized)
 25.5343.7317.83
Price/Book Value
 2.031.122.11
Price/Sales
 3.121.202.71
Price/Cash Flow
 13.068.8910.78
Price/Earnings
6981
6976
2327

Financial Strength

Metric
6981
6976
2327
Quick Ratio
 3.062.140.99
Current Ratio
 5.163.461.24
Interest Coverage
 —17.839.16
Quick Ratio
6981
6976
2327

Profitability

Metric
6981
6976
2327
Return on Assets (Normalized)
 7.89%2.51%5.98%
Return on Equity (Normalized)
 9.41%4.25%14.51%
Return on Invested Capital (Normalized)
 8.92%2.93%6.75%
Return on Assets
6981
6976
2327

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