Stock Valuation & Dividend Analysis: JXTG Holdings Inc (5020)

Name of Company Country of Origin/ Exchange Traded Sector Stock Price
JXTG HOLDINGS INC Japan/
TSE
Energy – Oil & Gas – Refining & Marketing – Oil & Gas Refining & Marketing JPY829.10
@ 30 Jul 2018
COMPANY PROFILE JXTG Holdings Inc is a holding company mainly engaged in petroleum business. It explores, refines and distributes petroleum and petro chemical products.

JXTG Holdings Inc is a holding company explores, refines and distributes petroleum and petro chemical products. It offers product such as Petroleum products, including gasoline, naphtha, kerosene, diesel fuel and heavy oil; Petrochemical products, including benzene and paraxylene, liquefied petroleum gas, lubricating oil. The company is also engaged in oil and natural gas exploration and development. In addition it also offers nonferrous metal and electrical material processed products. Geographically, it operates through Japan and generates majority of revenue through sale of petroleum and petro chemical products.

Stock Code 5020
Stock Valuation and Dividend Analysis Below

JXTG Holdings Dividend Yield

For stocks that has a history of paying meaningful dividends, the stock price is often dependent on how much dividend the company pays.
At the price of JPY829.10 as at 30 Jul 2018, JXTG Holdings Inc is trading at a Dividend Yield of 2.4%. This is a 24.0% premium to its historical average Dividend Yield of 3.1%.  (Note: The lower/higher the dividend yield, the more expensive/cheaper the stock is.)
Is the stock overvalued? One should not just look at one indicator to determine the fair value of a stock.
ProThinker believes in using a combination of valuation methods to decide whether a stock is over or undervalued? The five ratios we use are Price to Earnings, Price to Sales, Price to Cash Flow, Price to Book and Dividend Yield. We use multiple methods to value a stock because each has its benefits as well as shortcomings. Price to Earnings and Price to Cash Flow Ratios relate stock price to profitability but are meaningless when the comany has negative earnings or cash flows. Price to Sales Ratio is more stable because sales are never negative. However, this does not tell us whether the company is able to sell profitably. Price to Book Ratio gives us an indication as to how much we are paying for the company’s assets but it is not directly related to the company’s profitability. Dividend Yield cannot be used for companies that are paying little to no dividends.
While it is important to value stocks based on multiple valuation methods, this often leads to differing views on valuation. One indicator may suggest that a stock is overvalued while another suggest that it is undervalued. This does not help an investor who needs to make a definite decision whether to buy, hold or sell the stock. That is why we advocate the use of a Composite Valuation Indicator, which is derived from the best combination of the five indicators above. A Composite Valuation Indicator will give you ONE conclusion on whether a stock is under or over valued.
To find out more about our valuation methodology, click here. 
We should not only be concerned about the amount of dividends, we should determine if the dividends paid out by the company are sustainable. One way to do that is to compare dividends paid out to the cash flows that the company is generating.
The company usually pays less dividends than its free cash flow, which is good.

JXTG Holdings Dividend vs Free Cash Flow

Source of Data: Charts are from ProThinker Stock Report. Company description, historical financial statements data and price data are from gurufocus.com. Estimates are from gurufocus and/or 4-traders.com – Thomson Reuters.
Disclaimer: This report is for information purposes only and should not be considered a solicitation to buy or sell any security. Neither ProThinker nor any other party guarantees its accuracy or makes warranties regarding results from its usage. Redistribution is prohibited without the express written consent of ProThinker. Copyright(c) 2018. All rights reserved.

 

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