Japan Tobacco Inc. (JP:2914)
:2914
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Japan Tobacco
(2914)
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Rating:72Outperform
Price Target:
¥7,044.00
▲(17.79% Upside)
Action:Upgraded
Date:05/09/26
The score is driven primarily by solid underlying financial performance (strong margins and free-cash-flow profile despite volatility and weaker cash conversion) and a constructive earnings call with upbeat FY2026 guidance and a shareholder-return focus. These positives are tempered by mixed-to-soft technical momentum and valuation ambiguity from the negative P/E, partially offset by the ~4% dividend yield.
Positive Factors
Strong margins and profitability
JT's high TTM gross and operating margins reflect durable pricing power and cost structure advantages in tobacco. Such margin levels provide resilience to industry volume declines, support reinvestment in growth initiatives and sustain shareholder distributions over multi‑year horizons.
Negative Factors
Weak operating cash conversion
Reported profits convert to cash relatively poorly, raising quality‑of‑earnings concerns. Low operating cash conversion limits true distributable earnings, makes dividends and buybacks more sensitive to working‑capital swings and reduces buffer for heavy upfront RRP spends.
Read all positive and negative factors
Positive Factors
Negative Factors
Strong margins and profitability
JT's high TTM gross and operating margins reflect durable pricing power and cost structure advantages in tobacco. Such margin levels provide resilience to industry volume declines, support reinvestment in growth initiatives and sustain shareholder distributions over multi‑year horizons.
Read all positive factors
Japan Tobacco (2914) vs. iShares MSCI Japan ETF (EWJ)
Market Cap
¥11.26T
Dividend Yield3.49%
Average Volume (3M)3.98M
Price to Earnings (P/E)13.6
Beta (1Y)0.50
Revenue Growth10.14%
EPS Growth206.36%
CountryJP
Employees53,593
SectorConsumer Defensive
Sector Strength42
IndustryTobacco
Share Statistics
EPS (TTM)309.65
Shares Outstanding2,000,000,000
10 Day Avg. Volume4,011,180
30 Day Avg. Volume3,977,306
Financial Highlights & Ratios
PEG Ratio0.11
Price to Book (P/B)2.45
Price to Sales (P/S)2.89
P/FCF Ratio27.00
Enterprise Value/Market CapN/A
Enterprise Value/RevenueN/A
Enterprise Value/Gross ProfitN/A
Enterprise Value/EbitdaN/A
Forecast
1Y Price Target
¥6,564.29Price Target Upside9.77% Upside
Rating ConsensusModerate Buy
Number of Analyst Covering7
EPS Forecast (FY)337.72
Revenue Forecast (FY)¥3.78T
Japan Tobacco Business Overview & Revenue Model
Company Description
Japan Tobacco Inc., a tobacco company, manufactures and sells tobacco products, prescription drugs, and processed foods in Japan and internationally. The company operates through four segments: Domestic Tobacco, International Tobacco, Pharmaceutic...
How the Company Makes Money
JT makes money primarily by selling tobacco products, with revenue generated from the manufacture and sale of cigarettes and other tobacco-related products in domestic and international markets. In Japan, earnings are driven by sales volume and pr...
Japan Tobacco Earnings Call Summary
Earnings Call Date:Feb 12, 2026
(Q4-2025)
| % Change Since: |
Next Earnings Date:Jul 30, 2026
Earnings Call Sentiment Positive
Overall the call presented a strongly positive operational and financial performance in FY2025 with record revenue, AOP and cash flow, driven by exceptional Combustibles pricing and rapid RRP (heated products) growth. Management articulated a clear, well-funded plan to scale RRP (JPY 800 billion through 2028) and reiterated a shareholder-friendly 75% payout target. Key risks highlighted include foreign-exchange volatility (notably Iran), heavy upfront RRP investment with uncertain exact timing to profitability, ongoing industry volume decline and margin pressure in the processed food business. On balance the company emphasized durable momentum, disciplined capital allocation and confidence in achieving high single‑digit AOP growth over the plan period, while flagging execution and macro/FX risks.Positive Updates
Record Financial Performance
Group delivered record highs across revenue, AOP and profit in FY2025. AOP on a constant currency basis increased strongly (management cited +24.9% year-on-year at group level), core revenue rose ~15% and adjusted operating profit grew over 23% year‑on‑year (company commentary).
Negative Updates
Foreign Exchange and Currency Volatility
Significant FX headwinds affected results: depreciation of several emerging market currencies and a sharp deterioration in the Iranian exchange rate reduced profit; profit from continuing operations came in below the previously announced JPY 555 billion forecast. Management expects negative FX impact to persist in FY2026.
Read all updates
Q4-2025 Updates
Positive
Negative
Record Financial Performance
Group delivered record highs across revenue, AOP and profit in FY2025. AOP on a constant currency basis increased strongly (management cited +24.9% year-on-year at group level), core revenue rose ~15% and adjusted operating profit grew over 23% year‑on‑year (company commentary).
Read all positive updates
Company Guidance
The management guided that under Business Plan 2026 (FY2026–FY2028) JT will prioritize large-scale investment—around JPY 800 billion from 2026–2028 (with ~80% directed to commercial initiatives/marketing and annual spend ramping into the latter years)—to drive heated products and RRP as a second growth engine while targeting mid‑ to high‑single‑digit consolidated AOP growth (explicitly a high‑single‑digit CAGR over the plan); for FY2026 they forecast group core revenue +3.6% (constant FX), consolidated AOP +8.9% (const. FX), operating profit +6.2% and profit +14.2%, with Tobacco core revenue +3.4% and Tobacco AOP +8.5% (const. FX) even as total Tobacco volume is expected to be flat to ‑1% y/y; they reaffirm strong 2025 results (2025 AOP +24.9% const. FX; Tobacco AOP +23.5% const. FX; RRP volume +28%, RRP revenue +24%, heated products +3.2bn units or +38.6% and heated revenue ~+50% const. FX; Combustibles volume +1.7%, GFBs +2.8% to 74% of Combustibles, Winston +4.9%, Camel +4.3%, price/mix contribution ~10.8% and Combustibles margin +3.4pp) and confirmed shareholder returns with a JPY 234 DPS for 2025 and a Canada‑adjusted forecast DPS of JPY 242 for 2026 (payout ratio ~75%, projected 75.2%).Japan Tobacco Financial Statement Overview
Summary
Income Statement
83
Very Positive
Balance Sheet
74
Positive
Cash Flow
77
Positive
| Breakdown | TTM | Dec 2025 | Dec 2024 | Dec 2023 | Dec 2022 | Dec 2021 |
|---|---|---|---|---|---|---|
Income Statement | ||||||
| Total Revenue | 3.56T | 3.47T | 3.15T | 2.84T | 2.66T | 2.32T |
| Gross Profit | 2.01T | 1.95T | 1.64T | 1.51T | 1.45T | 1.26T |
| EBITDA | 1.07T | 966.32B | 454.17B | 832.83B | 829.17B | 687.13B |
| Net Income | 549.74B | 510.18B | 179.24B | 482.29B | 442.72B | 338.49B |
Balance Sheet | ||||||
| Total Assets | 8.35T | 8.42T | 8.37T | 7.28T | 6.55T | 5.77T |
| Cash, Cash Equivalents and Short-Term Investments | 694.62B | 831.13B | 1.08T | 1.04T | 866.88B | 721.73B |
| Total Debt | 1.78T | 1.68T | 1.79T | 1.20T | 1.02T | 979.16B |
| Total Liabilities | 4.24T | 4.30T | 4.52T | 3.37T | 2.93T | 2.89T |
| Stockholders Equity | 4.09T | 4.09T | 3.77T | 3.83T | 3.54T | 2.81T |
Cash Flow | ||||||
| Free Cash Flow | 420.55B | 370.85B | 502.24B | 472.15B | 402.39B | 512.56B |
| Operating Cash Flow | 560.23B | 514.06B | 630.01B | 567.01B | 483.80B | 598.91B |
| Investing Cash Flow | -196.40B | -265.00B | -439.74B | -125.72B | -101.80B | -97.46B |
| Financing Cash Flow | -455.15B | -475.46B | -94.94B | -270.91B | -306.20B | -353.18B |
Japan Tobacco Technical Analysis
Positive
5980.00
Price Trends
5947.70
Positive
5869.15
Positive
5407.02
Positive
Market Momentum
118.08
Negative
57.32
Neutral
76.36
Neutral
Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For JP:2914, the sentiment is Positive. The current price of 5980 is below the 20-day moving average (MA) of 6013.15, above the 50-day MA of 5947.70, and above the 200-day MA of 5407.02, indicating a bullish trend. The MACD of 118.08 indicates Negative momentum. The RSI at 57.32 is Neutral, neither overbought nor oversold. The STOCH value of 76.36 is Neutral, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Positive sentiment for JP:2914.
Japan Tobacco Peers Comparison
UnderperformOutperform
Sector (62)
Name | Overall Rating | Market Cap | P/E Ratio | ROE | Dividend Yield | Revenue Growth | EPS Growth |
|---|---|---|---|---|---|---|---|
72 Outperform | ¥11.26T | 13.56 | 12.70% | 3.49% | 10.14% | 206.36% | |
67 Neutral | ¥1.29T | 23.23 | 6.97% | 2.42% | 3.88% | -0.49% | |
66 Neutral | ¥2.44T | 15.14 | 6.47% | 3.23% | 0.42% | -7.71% | |
66 Neutral | ¥2.22T | 18.87 | 12.60% | 3.05% | 3.28% | 165.26% | |
62 Neutral | $20.33B | 14.63 | -3.31% | 3.23% | 1.93% | -12.26% | |
56 Neutral | ¥375.19B | 25.53 | ― | 1.92% | 8.72% | -27.11% | |
54 Neutral | ¥650.34B | -189.98 | 9.71% | 0.67% | -7.37% | 317.40% |
* Consumer Defensive Sector Average
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Japan Tobacco Corporate Events
Japan Tobacco posts strong Q1 earnings and affirms guidance after exiting pharma business
May 8, 2026
Japan Tobacco reported robust first-quarter results for 2026, with revenue rising 15.2% year-on-year to ¥923.96 billion and operating profit climbing 24.7% to ¥304.55 billion, driven by solid performance in its continuing operations. Pro...
Glossary
BuyA stock rated as a "Buy" is expected to perform better than the overall market or a specific benchmark over the near-to-medium term. This rating suggests the stock is likely to deliver higher returns compared to other stocks in the same sector or market index. Note: This is not investment advice; please consult a financial advisor before making investment decisions.
HoldA stock rated as a "Hold" is expected to perform in line with the overall market or a specific benchmark. This rating indicates that the stock is neither particularly compelling nor unfavorable for investment. Note: This is not investment advice; please consult a financial advisor before making investment decisions.
SellA stock rated as a "Sell" is expected to perform worse than the overall market or a specific benchmark over the near-to-medium term. This rating suggests the stock may deliver lower returns compared to other stocks in the same sector or market index. Note: This is not investment advice; please consult a financial advisor before making investment decisions.
Disclaimer
This AI Analyst Stock Report is automatically generated by our AI systems using advanced algorithms and publicly available financial, technical, and market data. While the information provided aims to be accurate and insightful, it is intended for informational purposes only and should not be considered financial advice. Any content created by an AI (Artificial Intelligence) system may contain inaccuracies and/or contain errors. Investing in stocks carries inherent risks, and past performance is not indicative of future results. This report does not account for your personal financial circumstances, objectives, or risk tolerance. Always conduct your own research or consult with a qualified financial advisor before making investment decisions. The analysis and recommendations provided are based on historical and current data and may not fully reflect future market conditions or unexpected developments. Neither the creators of this report nor its affiliated entities guarantee the accuracy, completeness, or reliability of the information presented. Use this report at your own discretion and risk.