NMR

We rate NOMURA HOLDINGS INC (NMR) as a Buy with a composite score of 71.9/100 at a current price of $9.00. The stock scores above average across the majority of our six quantitative factors and ranks #57 out of 7,333 stocks in our universe, reflecting a favorable risk-reward profile.

The rating is primarily driven by strength in value (92th percentile) and momentum (87th percentile), which together account for the majority of the composite score. Offsetting weakness in stability (40th percentile) and investment (59th percentile) tempers our overall conviction. We assign a Narrow Moat rating (43/100), High uncertainty, and Poor capital allocation.

Key items to watch: balance sheet deleveraging progress. Any material change in these dynamics could warrant a reassessment of our rating. The moat trend is stable, which suggests the competitive landscape is stable for now.

NOMURA HOLDINGS INC holds a top-quartile position (#3 of 50) within the Finance, Insurance, And Real Estate sector, based on our composite quantitative scoring across quality, value, momentum, and stability factors. The composite score of 71.9/100 places it at rank #57 in our full 7,333-stock universe. With a $18.3B market capitalization, NOMURA HOLDINGS INC operates at meaningful scale within the Finance, Insurance, And Real Estate sector, providing competitive advantages in distribution, procurement, and customer reach.

The outlook is moderately positive, with revenue expanding at 15% and favorable momentum (87th percentile) reflecting constructive market sentiment. The business shows steady execution, though the growth rate is below the levels typically associated with high-conviction growth stories. Momentum confirmation provides support for the current price level.

The margin cascade tells an important story: gross margins of 85% (+8.0pp vs sector) narrow to operating margins of 70% (+53.0pp vs sector) and net margins of 7.3%, yielding a gross-to-net conversion rate of 9%. The significant margin erosion from gross to net suggests elevated operating expenses, high interest costs, or other structural drags that warrant monitoring.

At a current price of $9.00, NOMURA HOLDINGS INC appears undervalued relative to its fundamentals. Our value factor score of 92/100 reflects a composite assessment across multiple valuation metrics including price-to-earnings, price-to-book, EV/EBITDA, and price-to-sales ratios relative to both sector peers and the broader market. The stock screens as attractively priced on a majority of these measures, suggesting the market may be underappreciating the underlying fundamentals.

The stock currently trades at a P/E of 11.8x (roughly in line with the sector median of 11.9x), EV/EBITDA of 2.3x (discounted to peers), P/B of 1.2x, P/S of 0.2x. The below-sector P/E suggests possible undervaluation or the market pricing in near-term headwinds.

We assign a High uncertainty rating to NOMURA HOLDINGS INC. Key risk factors include significant leverage (923% debt-to-equity), below-average price stability (40th percentile). The wide range of potential outcomes widens our fair value estimate and increases the possibility of permanent capital impairment. Investors considering this name should size positions accordingly and demand a meaningful margin of safety before initiating.

Specific risk factors that inform our assessment include: significant leverage (923% debt-to-equity); below-average price stability (40th percentile). Each of these factors independently widens the distribution of potential outcomes, and in combination they create a risk profile that demands careful position sizing. The stability factor at the 40th percentile and quality factor at the 81th percentile provide a quantitative summary of the overall risk landscape.

Key risk mitigants include: healthy gross margins of 85% provide a buffer against cost pressures. These factors partially offset the identified risks and provide downside protection in adverse scenarios. On balance, the risk-reward profile warrants caution and disciplined position management.

We rate NOMURA HOLDINGS INC's capital allocation as Poor. Key concerns include elevated leverage (923% D/E). Exemplary capital allocators generate ROE above 20% and maintain conservative leverage — NOMURA HOLDINGS INC significantly underperforms these benchmarks, raising questions about management's ability to create shareholder value.

Investors should scrutinize management's reinvestment decisions and balance sheet trajectory before committing capital. Poor capital allocation often compounds over time: overlevered balance sheets limit strategic flexibility, while low returns on capital destroy shareholder value. We would need to see sustained improvement in profitability metrics and balance sheet discipline before considering an upgrade.

In summary, NOMURA HOLDINGS INC receives a Buy rating with a composite score of 71.9/100 (rank #57 of 7,333). Our quantitative framework assigns a Narrow Moat (43/100, trend: stable), High uncertainty, and Poor capital allocation. The average factor score across quality, value, momentum, stability, and investment is 72/100.

Our analysis supports a constructive view on NOMURA HOLDINGS INC. The combination of identifiable competitive advantages, high uncertainty, and poor capital allocation creates a risk-reward profile that favors accumulation at current levels. We recommend investors consider adding this name to portfolios aligned with the stock's risk profile.