Andrew Smithers: Valuing Japanese Shares – Part One

Andrew Smithers: Valuing Japanese Shares – Part One

Valuing Japanese Shares – Part One by Andrew Smithers, FT

In two earlier blogs I explained why the cyclically adjusted price earnings yield (Cape) could not sensibly be applied to valuing Japanese shares. (One of several reasons is that Cape is only valid if profit margins are mean reverting over relatively short periods of time, such as 10 years or so, and this has not been the case in Japan.) This does not mean that they cannot be valued by other means. In this and the next blog I attempt one possible way to do this.

Tables one and two (below) compare the published data of listed Japanese and US non-financial companies and the resulting ratios derived from them at current market prices.

Gates Capital Returns 32.7% Tries To Do “Fewer Things Better”

Gates Capital Management's Excess Cash Flow (ECF) Value Funds have returned 14.5% net over the past 25 years, and in 2021, the fund manager continued to outperform. Due to an "absence of large mistakes" during the year, coupled with an "attractive environment for corporate events," the group's flagship ECF Value Fund, L.P returned 32.7% last Read More

Japanese shares

It appears that US companies are much more profitable than Japanese ones. Comparisons made over previous years also show a similar disparity. If these figures are accepted as providing a fair comparison, it would be reasonable to claim that US companies should be valued much more highly than Japanese ones.


Japanese shares

See full via FT

Updated on

Sheeraz is our COO (Chief - Operations), his primary duty is curating and editing of ValueWalk. He is main reason behind the rapid growth of the business. Sheeraz previously ran a taxation firm. He is an expert in technology, he has over 5.5 years of design, development and roll-out experience for SEO and SEM. - Email: sraza(at)
Previous article Caterpillar Inc. Climbs After Earnings Top Estimates
Next article A Tale Of Two Bermuda Reinsurers

No posts to display