MFG Investment Analysis Report & Stock Research, Mizuho Financial Group, Inc.-Sp ADR Shs Sponsr Amern Deps Recp 2 Sh

Ockham’s Rating

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MFG Revenue

Cash earnings is the most important factor in our analysis, but it goes without saying that if a company cannot produce sales then there is no ability to generate cash flow. By that logic we look very closely at revenue numbers as our second most important factor in valuing a company’s stock. We have established reasonable Price to Sales per share ranges based on historical data of the last 5 years. For, MFG the high and low end of the Price to Sales per share ratios are 2.51x and 1.44x respectively.

Notice that MFG’s current Price to Sales per share ratio is 0.65x, which is quite a bit below what we consider a normal Price to Sales ratio for this stock. Given normal conditions and a price of $4.86, MFG is 68% below where we would expect to see it. This will beneficially factor into our final analysis of MFG as it is not often that this stock sinks to these levels.

MFG Cash Earnings

As the old saying goes, "Cash is King!" We look at reported Cash Earnings, but the main emphasis of our analysis involves stripping out non-cash events such as depreciation from our cash earnings analysis. This helps us view the cash flows more clearly. Nevertheless, an analysis of Cash Earnings (both reported and otherwise) is absolutely pivotal to assessing a company’s value, and currently MFG is significantly below its historical average multiple of cash earnings as calculated by Ockham. Similar to our analysis of sales per share, Ockham looks at the last 5 years of cash earnings levels for MFG to identify where the current high and low price levels have been historically in relation to profit per share. Again, we utilize a weighted average methodology which relies more heavily on recent years of data. This weighted average framework provides us with an average high Price to Cash Earnings ratio per share of 31.73 and a 14.12 low over the same period.

Now that MFG’s current price is $4.86 and its Price to Cash Earnings ratio is 11.85, we are very positive on its outlook from the cash earnings perspective. In fact, MFG is now trading a full 49% below its average historical Price to Cash Earnings ratio at these profit per share levels. When our clients ask us why MFG has great long term potential, the Cash Earnings levels to current stock is one of our primary reasons. But naturally, now we need for the overall market to recognize this disparity.

MFG Dividends

When determining a company’s future prospects for success, Ockham Research sees analysis of dividend payments as a key additional factor. Even though it isn’t imperative for MFG to shell out a dividend in order to receive a positive rating, it can be helpful to further our analysis. While we do like to see companies with healthy and growing dividends, it is not appropriate for all companies, especially those focused on growth. In this regard, we regard MFG as neutral because we do not have historical data for this company’s dividends. We will being incorporating this into our analysis as soon as that data is available.