At the halfway point of fiscal 2026, an analysis found that the Nikkei 225's firm performance was supported by improved corporate profitability. Observations on practical corporate management metrics, including improvements in ROE and changes in the distribution of PBRs, have been compiled.
The Nikkei 225 performed firmly in the first half of fiscal 2026. Although it fell approximately 17% from its June peak to its July low, its overall resilience was viewed positively. Expectations for AI and semiconductor-related companies are said to have contributed, while over the longer term, efforts to improve capital efficiency have increasingly been valued.
A breakdown of ROE levels shows that the number of companies with ROE above 10% has increased from 10 years ago, while the number with a PER above 20x has changed little. In the distribution of PBRs, the number of companies above 2x has increased, while the number at 1x or below has declined. These trends suggest that improved share-price levels and higher corporate profitability may be mutually supportive.
An examination of net profit margins found that the number of companies with operating margins above 15% has more than doubled from 10 years ago. The improvement in profitability was explained as contributing to higher ROE. The author points out that share prices may remain resilient during a recovery phase as long as corporate efforts continue.