Layer: L9-Sensors-Passives
Date: 2026-05-28
Screen type: FULL (YTD +61.9%, below 80% threshold)
Verdict: RED
| Metric | Value |
|---|---|
| Current price | JPY 3,608 |
| 52w High | JPY 3,815 |
| 52w Low | JPY 1,461 |
| Distance from 52w high | -5.4% |
| YTD return (2026) | +61.9% |
| 5yr return (from JPY 846) | +326% |
| Market cap | JPY 6.85T (~EUR 41.9B) |
Context: This is NOT a drawdown opportunity. TDK has rallied 146% from its 52w low. The stock trades near all-time highs. Q4 FY26 (Jan-Mar 2026) EPS missed consensus by -38.9%.
| Segment | Revenue | % Total | Key Products |
|---|---|---|---|
| Energy Application (ATL) | ~JPY 950B | ~43% | Li-ion polymer batteries (Apple, Huawei, EV) |
| Passive Components | ~JPY 650B | ~29% | Ceramic/film capacitors, inductors, HF components |
| Sensor Application | ~JPY 230B | ~10% | Temperature/pressure, magnetic, MEMS sensors |
| Magnetic Application | ~JPY 180B | ~8% | HDD heads, suspension, magnets |
| Other | ~JPY 195B | ~9% | Mechatronics, camera actuators, insurance/RE |
| Total | JPY 2,204.8B | 100% |
ATL note: Amperex Technology Limited (~80% owned subsidiary). World's largest Li-polymer battery producer. ~70% smartphone/IT batteries (Apple is key customer), ~20% EV. Major conglomerate discount arises because ATL is not separately listed — private valuation is hard to observe. TDK-CCA (joint venture with CATL for EV batteries in China) adds further optionality.
| Fiscal Year | EPS (diluted, JPY) | YoY |
|---|---|---|
| FY2022 (Mar 2022) | 69.20 | — |
| FY2023 (Mar 2023) | 60.13 | -13.1% |
| FY2024 (Mar 2024) | 65.64 | +9.2% |
| FY2025 (Mar 2025) | 87.98 | +34.1% |
| FY2026 (trailing, Mar 2026) | 102.83 | +16.9% |
| FY2027 (forward, analyst consensus) | 106.88 | +3.9% |
FY26 quarterly breakdown: Q1=21.85, Q2=36.85, Q3=36.77, Q4=7.62
Q4 FY26 miss: EPS 7.62 vs 12.46 expected (-38.9%). Significant shortfall. Likely Apple order timing or ATL inventory normalization.
4yr CAGR (FY22→FY26): +10.4% — this is a cyclical grind, not a compounding compounder.
| Filter | Criterion | Value | Result |
|---|---|---|---|
| F1: Size | Revenue > USD 100M equiv. | JPY 2.20T | PASS |
| F2: Current Ratio | ≥ 2.0x | 1.67x | FAIL |
| F3: LT Debt / Working Capital | ≤ 1.0x | 0.47x | PASS |
| F4: Earnings Continuity | No deficit in 5yr | No losses FY22-FY26 | PASS |
| F5: Dividend Continuity | Uninterrupted | Paid & growing since 2015+ | PASS |
| F6: EPS Growth 4yr | ≥ 33% | +49% (FY22→FY26) | PASS |
| F7a: P/E | ≤ 15x | 35.1x | FAIL |
| F7b: P/B | ≤ 1.5x | 3.80x | FAIL |
| F7c: P/E × P/B | ≤ 22.5 | 133.5 | FAIL |
Score: 5/7 PASS (fails F2, F7a, F7b, F7c)
Note: F7 has 3 sub-criteria, all fail. No Graham margin of safety at current price.
shr-017 cyclical trap check: Revenue +21% YoY (FY25) was partly FX tailwind (~75% non-JPY revenue in weak-JPY environment). Forward growth consensus only +6.7% — decelerating sharply. Earnings near-peak with Q4 miss already signaling weakness.
Formula: V = EPS × (8.5 + 2g)
Trailing EPS: JPY 102.83 | Forward EPS (FY27): JPY 106.88
| Growth Assumption | Trailing IV | Fwd IV | MoS (trailing) | MoS (fwd) |
|---|---|---|---|---|
| g = 0% | JPY 874 | JPY 908 | -312.8% | -297.1% |
| g = 3% | JPY 1,491 | JPY 1,550 | -142.0% | -132.8% |
| g = 5% | JPY 1,902 | JPY 1,977 | -89.7% | -82.5% |
| g = 7.5% | JPY 2,417 | JPY 2,512 | -49.3% | -43.6% |
| g = 10% | JPY 2,931 | JPY 3,046 | -23.1% | -18.4% |
Break-even growth (trailing P/E 35.1x): g = 13.3%
Break-even growth (forward P/E 33.8x): g = 12.6%
Gap trailing vs forward: only 0.7pp — NOT pricing a profitability inflection (shr-003). Market is pricing steady state growth.
Interpretation (shr-012 sensitivity table): Even at an optimistic 10% sustained EPS growth, IV is -23% below current price. To justify the current price, TDK must deliver 13%+ EPS CAGR indefinitely — but the 4yr actual CAGR was only 10.4% and FY27 consensus is +4%. The valuation has no margin of safety at any plausible growth rate.
| Year | OCF (JPY B) | CapEx (JPY B) | FCF (JPY B) | FCF Yield |
|---|---|---|---|---|
| FY2022 | 178.9 | 291.3 | -112.4 | neg |
| FY2023 | 262.8 | 275.7 | -12.9 | neg |
| FY2024 | 447.0 | 218.6 | 228.4 | — |
| FY2025 | 445.8 | 225.3 | 220.5 | 3.2% |
P/FCF (FY2025): 31.1x
FCF vs dividends: JPY 220B FCF vs JPY 68B dividends — 3.2x coverage, no payout risk.
CapEx trend: Declining from 15.3% of revenue (FY22) to 10.2% (FY25). FCF normalization happened in FY24 after two years of negative FCF. Positive structural shift.
No SBC adjustment needed (Japanese industrial company, no equity compensation culture like US tech).
| Metric | Value |
|---|---|
| Total assets | JPY 3,541B |
| Total debt | JPY 608B |
| Cash + STI | JPY 775B |
| Net cash | JPY +166B (net cash position) |
| D/E ratio | 0.34x |
| Current ratio | 1.67x |
| Working capital | JPY 738B |
| Goodwill + intangibles | JPY 214B (6% of assets) |
| Book value per share | JPY 948 |
Clean balance sheet. Net cash position. No financial distress. Goodwill is modest relative to assets.
| Metric | Value |
|---|---|
| FY2026 dividend (declared) | JPY 36/sh |
| Dividend yield | 1.00% |
| Payout ratio | 35% |
| 4yr dividend CAGR | ~24% (JPY 21.2 → JPY 36) |
Dividend has grown consistently (FY22: 21.2 → FY26: 36), but 1.00% yield is unattractive for a Graham income investor. The 24% dividend CAGR reflects yen-value growth, not outstanding yield.
| Metric | Value |
|---|---|
| Analysts covering | 17 |
| Strong Buy / Buy | 5 / 8 |
| Hold / Sell | 2 / 1 |
| Recommendation (1-5) | 1.81 (Buy) |
| Mean price target | JPY 2,947 |
| Median target | JPY 3,000 |
| High target | JPY 4,100 |
| Low target | JPY 1,900 |
Critical flag: Current price JPY 3,608 is +22.4% ABOVE the mean analyst PT and +20.3% above median. The stock has run past analyst consensus. This is an overextension signal — historically when price materially exceeds consensus PT, forward returns compress.
| Category | Status | Notes |
|---|---|---|
| Recent price action | RED | YTD +62%, near 52w high, Q4 FY26 miss -39% |
| Earnings/news | RED | Q4 miss, FY27 +4% growth consensus only |
| Insider activity | AMBER | 0.22% insider ownership, no transactions (typical Japan large-cap) |
| Analyst ratings | RED | Stock +22% above mean PT of JPY 2,947 |
| Dividend status | GREEN | JPY 36, +20% YoY, 3x+ FCF coverage |
| Balance sheet | GREEN | Net cash, D/E 0.34x, clean |
| Short interest | GREEN | No distress signals, 58.7% institutional |
| Graham valuation | RED | P/E 35x, P/B 3.8x, IV at 10% growth still -23% below price |
| Cyclicality risk (shr-017) | RED | ATL = 43% rev, smartphone-cycle dependent, Q4 already showing weakness |
| FX tailwind risk | AMBER | ~75% non-JPY rev, BOJ normalization headwind if JPY strengthens |
Summary: 5 RED / 2 AMBER / 3 GREEN
BULL CASE
BEAR CASE
| Metric | Value |
|---|---|
| EUR equivalent price | ~EUR 22.07/sh |
| Available DEGIRO satellite | ~EUR 3,000 |
| Shares for EUR 3,000 | ~136 sh |
| Min DEGIRO lot | 1 share (TSE ADR via DEGIRO) |
Note: DEGIRO typically allows direct Tokyo Stock Exchange access for European investors. TSE-listed shares only, no ADR needed. Currency risk JPY/EUR is a live factor.
Current portfolio context: EUR ~2,167 deployed (AGN.AS/RI.PA/AIG/AKE.PA). TDK at current price does not meet Graham defensive criteria and carries active negative signals (price above PT, earnings miss, 5 RED flags). It would not receive capital allocation even if EUR 3,000 were fully available.
VERDICT: RED
TDK Corp is a high-quality Japanese industrial conglomerate with genuine growth assets (ATL battery, sensor platform). However, it is emphatically NOT a Graham value stock at current prices:
Watch conditions for future consideration:
VERDICT LINE: RED — TDK Corp (6762.T) at JPY 3,608 offers zero margin of safety (IV at 10% growth = JPY 2,931), trades 22% above analyst mean PT, just reported a -39% EPS miss, and fails all 3 Graham valuation filters; not a value buy at current price, revisit at JPY 2,200-2,500.