Nintendo Is a Believer
Nintendo Co. is starting to believe in itself.
Shares of the Japanese games company have climbed 75 percent this year on speculation its Switch console would be a hit. Investors put that rally on hold in July after the company chose not to upgrade its full-year shipment forecast, a sign the market had been expecting.
Then on Monday, Nintendo posted the largest revenue beat in a decade, and the strongest operating income turnaround in 10 quarters. While analysts had been bullish, they hadn't been that bullish.
This clearly gave Nintendo executives the courage to upgrade the company's own forecast, telling investors that it will ship 14 million Switch units for the year, 40 percent higher than its previous prediction.
What's also encouraging is that the strong revenue and operating metrics are resulting in wider profitability. At 10.8 percent, the most recent operating margin isn't as good as the December quarter last year. But if Nintendo delivers on that bolder shipment forecast, investors can be hopeful that margins will also expand.
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