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What Makes Canon Attractive To Investors?

Canon is a renowned office and electronic equipment name. It is a multinational corporation with its headquarters in Tokyo, Japan. Canon Inc. is into manufacturing of multifunctional office devices such as plain paper copier, laser printers, inkjet printers, Cannon printer cartridge and camera and lithography equipment. Basically canon operates under three major business segments 1) Imaging systems business units 2) Office business unit and 3) Industry and other business unit. And it is a leader in all the three segments.

Financial report of Canon

First quarter report of 2018 clearly tells that Canon is not only a renowned household name but it is also a huge company with market capital of $37 billion. It is one of the largest companies under imaging systems business unit category o having strong hold over 20 percent of digital camera market.

According to the report though there was drop of revenues by 3.6%, net income by 8.6%, earnings per share by 11% and sales by 1.2% but as Japanese economy continues to grow and Yen becomes stronger, canon is as expected to continue its growth journey. Company also took some staunch steps like reducing the operational costs by 7% leading to strong operating margins and attractive bottom line result.

Story behind the scene

Main driving force behind the first quarter results of canon can be seen in the industrial sector. High demand of semiconductor lithographic equipment drove Yen-based sale of the company by 16% as compared to the sales of previous year. This hike in sales doubled the operating margins for the given division. All thanks to accelerating market activity, management at canon is expecting a double digit sales growth in the second quarter too.

It is not only good news for the investors but also for semiconductors industry as a whole. Business manufacturers in the given segment are doubling their own infrastructure investments which they would not have done in face of a weak market.

Another feather in canon’s cap is that it is a leading supplier in vacuum deposition equipment used for manufacturing organic light emitting diode (OLED) screens. With high demand of OLED screens, canon is witnessing double digit accelerating growth in this product category and it does not seem to slow down any time soon.

Canon can be seen as a barometer for several markets

There are certain reasons why investors should take a note of Canon. First of all Canon stock has witnessed growth of 20% in the past year. Apart from that first quarter results of the company shows massive increase in earnings of the company.

With growth in Japanese economy Canon is also expected to grow with same rate and strength. Canon has yielded annual dividend of around 3.5% which is quite high for a tech giant.

Well planned corporate strategy and a solid balance sheet in back up have made Canon a promising investment option for both short term and long term investors. Company has come up with a solid business plan leading to solid profit growth. It is aiming to achieve approximately 5% sales growth and 25% operating profits (currency exchange effect not included) in coming year. Apart from that stock of the company is also trading at an affordable 17 times trailing earnings and 9 times free cash flow. PE ratio of Canon is 17.6 which are slightly below PE ratio of S&P 500 with ratio 19.9. It clearly indicates that stock is undervalued at the moment but it has a value oriented path ahead in near terms.

In order to achieve the projected growth company is planning many new product innovation and sales strategies. It plans to build cloud computing support system for its office printers and copiers. Apart from that investors will see lot of innovation in the digital camera sector. In order to boost sales in digital camera sector, company is planning to come up with new and innovative products such as light weight mirror less cameras mainly targeting video production sector.

A small investment in Canon Inc. will not only motivate you to keep a close watch on the results of the company but will also give you better understanding of semiconductor and OLED market.

Heavy investment of canon in printer sector!

Oce, a subsidiary company of Canon continues to make heavy investment in printer sector. Oce Company with a research and development wing, manufacturing unit, and business unit and support functions is witnessing heavy investment and growth. Canon which is Japanese parent company of Oce is not only promoting and supporting the growth strategies of the latter but also plans to make a heavy investment in the research and development wing of the company.

In order to keep up the pace with rapid development in the printer industry, Oce is planning to focus mainly on inkjet printer technology. With this aim in mind it is making heavy investment of 160 million Euros in the research and development of inkjet technology. It has come up with some of the most powerful roll to roll machines based on UV gel inkjet technology. This technology will not only help Oce to get a prominent position in graphic art market but also make it quite ahead of its competitors.

In order to maintain their leading position in the digital commercial printing market, Canon and Oce are planning heavy investments in the sector. Oce with support and guidance of Canon Inc. not only expects to continuously deliver on its strategic agenda but also achieve growth in time to come.

Keeping a close eye on digital commercial printing sector can open many avenues of investment for both small and large investors. Canon with full focus on research and development wing is expected to come up with some of the most innovative products that will change the graphic art market for good. Early investment in this sector can lead to huge gains in the time to come. It is also one of the reasons why investors across the globe are showing interest in investment in canon.

Author Bio:

Ved Prakash is the founder of Newsblare and content marketing evangelist who specialized in Technology, Business, Marketing, and Finance niches.

Ved is a marketing expert with specialization in IT sales and distribution management. He has a passion for process improvement with excellent analytical problem-solving skills.

He is the contributor of different... news sites that have widened his views on the current happenings in the world.


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