NSD (TSE:9759) Margin Improvement Reinforces Bullish Narrative Despite Valuation Premium

NSD (TSE:9759) reported a net profit margin of 10.9%, up from 10.4% last year, as earnings grew by 14%, edging out its own five-year average of 13.3% annual gains. Revenue and earnings are both forecast to grow faster than the Japanese market, supported by a history of rising profitability and stable margin improvement. With no significant risks noted and an attractive dividend, the latest release solidifies the view that NSD continues to deliver balanced, long-term rewards for investors.

See our full analysis for NSD.

The next section puts these numbers head to head with the top narratives investors follow, highlighting where the data confirms popular views and where it pushes back on market consensus.

Curious how numbers become stories that shape markets? Explore Community Narratives

• The Price-To-Earnings (P/E) ratio for NSD is 20.6x, which appears expensive compared to the Japanese IT industry average of 17.3x, but is more reasonable relative to the peer group average of 23.2x.

• Market observers note that while NSD’s multiple is high for the industry, its strong growth outpaces sector norms.

  • Annual earnings growth of 14% and projected revenue expansion of 6.5% per year both exceed the Japanese market averages, providing some justification for a higher multiple.

  • Although the share price of ¥3296 is above the DCF fair value of ¥2947.13, the smaller valuation gap compared to close peers may sustain investor interest, especially since no material risks are highlighted in the filings.

• NSD’s net profit margin improved to 10.9% from 10.4% last year, continuing a pattern of steady growth.

• Bulls emphasize this margin progress as a sign of durable business strength.

  • Consistent gains above the five-year average earnings growth rate of 13.3% support the view that NSD is performing well within a competitive sector.

  • Ongoing margin improvement along with rising revenue suggests operational discipline that benefits shareholders through both stability and potential upside, even as the company carries a higher P/E valuation.

• NSD’s revenue is projected to grow at 6.5% per year and earnings at 8.3% per year, both above the Japanese market averages of 4.5% and 7.8%, respectively.

• What stands out is that this faster growth, combined with a solid dividend and the absence of major risks in the filings,

  • Supports the argument for NSD as a potential choice for long-term, risk-averse investors seeking both income and steady capital appreciation.

  • However, trading nearly 12% above DCF fair value, the stock presents a classic tension between rewarding those prioritizing growth and presenting a watchpoint for those focused on discounted valuation.