Tokyo, Japan-based financial service provider ORIX Corporation (IX) reported its bottom line growth in the fiscal third quarter (ended December 31, 2022). Net income attributable to IX shareholders grew 38.6% year-over-year to ¥89.61 billion ($666.42 million). Earnings per share for net income attributable to IX shareholders came in at ¥76.30, up 41.3% year-over-year.
In addition, analysts are expecting substantial topline growth as the Japanese financial sector is forecasted to be stable. For the fiscal fourth quarter (ended March 2023), its revenue is expected to increase 12.8% year-over-year to $5.66 billion. Let’s take a look at ORIX's key financial metrics to understand why the stock may be a good investment.
Orix Corporation Financial Performance: Net Income, P/E Ratio, and Gross Margin
IX’s net income has fluctuated from June 30, 2020, when it was $28.35 billion, to December 31, 2022, when it was $31.21 billion. This represents a 10.3% growth rate over a two-year period. The net income experienced peaks on September 30, 2021, and March 31, 2022, with values of $24.52 billion and $31.21 billion, respectively, as well as lows on June 30, 2021 ($20.76 billion) and September 30, 2022 ($28.72 billion).
The Price/Earnings (P/E) ratio of IX has fluctuated over the past two years, increasing from 6.07 in June 2020 to 12.87 in June 2021. In the last quarter, the P/E ratio has decreased slightly to 11.79 as of December 2022. Over these two years, the P/E ratio has grown at a rate of 5.49%.
IX’s revenue has seen a steady but slight increase since June 2020, when it was $21.62 billion. It fluctuated over the next year, with peak revenue of $21.79 billion in September 2020 before dropping to $20.73 billion in March 2021. Revenue has since recovered to $21.59 billion in June 2021 and is currently reporting revenue of $20.3 billion in December 2022. IX’s revenue grew by 6.3% from its initial value in June 2020.
IX’s gross margin has been increasing slightly since last June, from 0.375 to 0.377 in the last reported quarter. Its highest value was 0.378 in March 2022, and its lowest value was 0.365 in March 2021. The growth rate from the first to the last value is 0.01, or 1%. Fluctuations in gross margin during this time have been small.
Orix Corp Ads Price Increase: 18.8% Over Five Months
The share price of IX has been increasing from a low of $72.53 on October 28, 2022, to a high of $86.17 on April 21, 2023. This shows an overall upward trend of approximately $13.64 or 18.8% over the five-month period. The growth rate appears to be accelerating over this period, with the first two months showing a growth of approximately 2.4%, with the last three months averaging around 6.5%. Here is a chart of IX's price over the past 180 days.
Impressive POWR Ratings: Momentum, Stability, and Sentiment
The overall POWR Ratings Grade of IX is currently B, which translates to Buy in our proprietary rating system. It is ranked second out of the nine stocks in the B-rated Foreign Consumer Finance industry. The stock has been steadily trending upward in the past three months, climbing from a POWR Grade of C in January 2021 to a peak of B with a rank in the category of 2 in mid-April 2021.
The POWR Ratings for IX reveal three noteworthy dimensions, namely Momentum, Stability, and Sentiment. Momentum has consistently had the highest ratings, with values ranging from 88 to 96 from October 2022 to April 2023. Secondly, Stability has also seen high ratings, with a value consistently above 90 over the same period. Lastly, Sentiment has seen an increasing trend, with the value increasing from 55 in October 2022 to 96 in April 2023.
How Does ORIX Corporation (IX) Stack Up Against Its Peers?
Other stocks in the Foreign Consumer Finance sector that may be worth considering are Yiren Digital Ltd. (YRD), Noah Holdings Limited (NOAH), and Grupo Supervielle S.A. (SUPV) -- they have better POWR Ratings.
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IX shares were trading at $85.46 per share on Friday afternoon, down $0.78 (-0.90%). Year-to-date, IX has gained 6.14%, versus a 8.05% rise in the benchmark S&P 500 index during the same period.
About the Author: Anushka Dutta
Anushka is an analyst whose interest in understanding the impact of broader economic changes on financial markets motivated her to pursue a career in investment research.
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