As a diversified company with several strong businesses, Kyocera Corporation (KYO) has excelled in industrial product areas, such as applied ceramics and components. However, the company expects sluggish sales in its component business during fiscal 2009 and a slowing consumer market could damage its digital consumer equipment business.
Moreover, infrastructure related costs and strong yen appreciation has taken a toll on profitability. On April 25, 2008, Kyocera Corporation announced results for the full fiscal year 2008, ended March 31, 2008. Revenue for the period was $11,286.7 million, compared to $10,977.2 million in the year-ago period.
Marginal revenue growth of 0.5% was attributed to strong sales in the component business, which more than offset decrease in sales in the equipment business. Net income for the full year of fiscal 2008 was $938 million or $4.95 per diluted share, compared to net income of $866.4 million or $4.36 per diluted share in the year-ago period.
Overall, the company attributed growth in the year to a moderate expansion in the Japanese economy due to strong corporate earnings amid increasing exports as well as stable individual consumption, which was offset by slumping housing investment and rising energy and raw material prices.
Kyocera is currently trading at 17x our estimated EPADS for 2009, a premium to the industry median. The company expects a challenging economic environment in fiscal 2009, which will have a negative impact on demand for digital consumer equipment. As a result, Kyocera lowered its 2009 earnings outlook, due to weak outlook for its component business as well as significant impact of yen appreciation.
We, therefore, continue to rate KYO a Hold and adjust our target price to $95.50. This price is based on a P/E multiple of 17.8x our EPADS estimate of $5.38 for 2009, which we believe reflects the company's prospects.
Read the full analyst report on KYO.
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