hitachi zosen stock

Hitachi Zosen Stock Analysis – Unlikely to hit 10% margin and 200% growth targets

Hitachi Zosen Stock Analysis  is part of a full Waste Management stocks sector investing analysis alongside a list of 15 waste management stocks, all analyzed.

Hitachi Zosen Corporation produces waste treatment plants, industrial plants, precision machinery, industrial machinery, steel mill process equipment, steel structures, construction machinery, tunneling machines, and power plants.

Hitachi Zosen business – Source: Investor Relations
Hitachi Zosen business – Source: Investor Relations

Hitachi Zosen stock analysis

Hitachi Zosen Stock is a different stock than Covanta stock or Clean Harbors stock that we already analysed. Clean Harbors being and expensive play in an exuberant market, Covanta being a high risk dividend payer, Hitachi stock shows how this is a difficult environment to operate it. The company forecasts profits of just 1 billion Yen on 395 billion in revenues.

However, if we discount Hitachi’s future cash flows at a 10% discount rate, we get to a present value that is similar to the current stock price. Given the price to cash flow rate of 12.94, expected future growth, the company is likely to deliver 10% returns.

As a typical Japanese company, they have a short term and a long-term 2030 management plan. And, as a typical Japanese company, they don’t mention rewarding shareholders within their plan.

Hitachi stock business plan - Source: Hitachi
Hitachi stock business plan – Source: Hitachi

They are really banking on hot environmental topics, but this doesn’t mean the stock will be a great investment.

Hitachi stock - environment
Hitachi stock – environment – Source: Hitachi

Their plan is to grow revenues to 1 trillion Yen and to increase operating margins to 10%.

Hitachi stock - business growth forecast
Hitachi stock – business growth forecast

If they do that, the stock will probably quintuple over the next decade, but I don’t see how will they get to higher margins in 10 years if they don’t have them now. Now, business is great globally, so why should it be better in 10 years with more competition?

Plus, they expected sales of 430 billion Yen for 2019 while actual sales are 390 billion.

Hitachi stock analysis - actual business
Hitachi stock analysis – actual business

To add to the above, they talk about data, artificial intelligence etc. Bullshit words I heard already and everyone is using them. Give me margins, not words. I don’t see from where will their competitive advantage come ???? A look at Hitachi Zosen’s stock price tells us the market doesn’t really believe them too.

Sven Carlin Ph.D., the author, is an independent stock market researcher and investor managing the Sven Carlin Stock Market Research Platform.

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