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Nintendo (TSE:7974) Could Be 4% Undervalued After The Hasbro Zelda Merchandise Deal

Simply Wall St · 2d ago

Hasbro’s new licensing partnership with Nintendo (TSE:7974) around the Legend of Zelda franchise has put fresh attention on the stock, as investors weigh what expanded merchandise could mean for Nintendo’s broader business.

See our latest analysis for Nintendo.

The Hasbro deal lands at a time when Nintendo’s short term momentum is picking up, with a 1 month share price return of 16.24% and a 7 day share price return of 9.52%. However, this follows a year to date share price decline of 28.08% and a 1 year total shareholder return decline of 38.87%, while the 5 year total shareholder return remains positive at 53.90%.

If you are looking beyond Nintendo’s latest move into merchandise, this could be a moment to broaden your search and uncover 10 top founder-led companies

Nintendo’s share price has bounced in the short term while longer term returns remain mixed, and fresh Zelda merchandise excitement adds another layer. Is this enough to justify buying now, or does it still pay to wait?

Most Popular Narrative: 4.3% Undervalued

The leading narrative for Nintendo currently pegs fair value at ¥8,001.44, slightly above the last close of ¥7,659, which suggests modest upside according to that framework.

Nintendo currently holds a competitive advantage because the unit price of the Switch 2 undercuts the Steam Deck significantly. Apparently supplier arrangements have secured the supply of LPDDR5X 12 GB modules. The absence of GTA VI on the console during the holiday poses a significant risk. Currently the Switch 2 is not serving the casual audience. Casual players might not opt for a Switch 2 and stay with their Switch 1. The Switch 2 seems to target a more dedicated audience which overlaps with its competitors, namely PS5 and Xbox. PlayStation 6 launch in 2027 may pose a risk. In the handheld and hybrid division Nintendo is the monopoly with more than 90% of the market share. Sony and Microsoft have announced price increases higher than the price increases of Nintendo, which puts Nintendo at the lowest barrier of entry, having not only the cheaper Switch 2 but also offering the Switch 1, which is the only console at a reasonable price value. The 4 GB of RAM in the Switch 1 helps to keep cost low. Households seem to purchase multiple devices. The software lineup for 2026 is rather weak, with its only blockbuster being Ocarina of Time. New entry Tomodachi Life caters to the female audience with good sales. In 2027, however, Pokemon Wind and Waves as well as some unannounced mainline titles will drive sales. Therefore sales and revenue will increase in 2027. The effects of Nintendo being significantly cheaper than its competitors through successful supply chain management and fair value product design still has to be quantified and will crystalize during the first two quarters of 2027. Total install base across Switch 1 and 2 will hit 200 million devices in 2027. The movie production serves as a complementary marketing tool, also leading to increased sales of software and hardware. Further research needs to be done to pinpoint the exact numbers.

Read the complete narrative.

Want to see what sits behind that ¥8,001.44 fair value for Nintendo? The narrative leans on specific assumptions around revenue growth, margins and future profit multiples that are not obvious from headline numbers alone. The full story connects hardware pricing, software pipelines and installed base expectations into one valuation roadmap.

Result: Fair Value of ¥8,001.44 (UNDERVALUED)

Have a read of the narrative in full and understand what's behind the forecasts.

However, this narrative could be challenged if the Switch 2 fails to attract casual players or if upcoming software releases do not match current expectations.

Find out about the key risks to this Nintendo narrative.

Next Steps

Given the mix of concerns and optimism around Nintendo, it makes sense to review the figures yourself and move quickly if your view is clear. You can weigh up both sides in one place with 3 key rewards and 2 important warning signs

Looking for more investment ideas beyond Nintendo?

If you are weighing what to do next after reviewing Nintendo, it helps to widen your lens and compare opportunities across different types of stocks using objective filters.

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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.