Is Wall Street Underestimating Nintendo's Earnings Power?
Nintendo (OTC: NTDOY) has been a leader in the video game industry for decades, building unique gaming hardware and software with a focus on kids and family content. Its newest console iteration, the Switch, is a roaring success, with 80 million units sold since its launch in 2017, helping substantially boost the company's earnings over the past few years. However, Nintendo still only trades at around 18.5 times its trailing earnings per share, indicating investors don't believe the company can sustain, much less grow, its profits over time. Here's why that thinking is misguided.
Image source: Getty Images.
Unlike the Wii and especially the Wii U (which was a total flop as a product), Nintendo has structured the Switch ecosystem to make it longer-lasting. Instead of having users make an account specifically for their device (as was done with the Wii), customers are required to make a Nintendo account that works across platforms. As of September of last year, Nintendo had over 200 million registered accounts, which should hopefully make it easier for customers to switch from one device to another and bring their user history to the next iteration of the Switch (whenever that occurs).
Source Fool.com
