Is Now the Right Moment for GS Yuasa After Recent Battery Supply Expansion Announcement?

If you’re eyeing GS Yuasa and wondering whether now could be an opportune time to get in, you’re not alone. The stock has shown plenty of twists and turns lately, leaving investors debating whether there’s more fuel left in the tank. Over the past week, shares dipped 5.7%, but zoom out and it looks like the longer-term picture has been far more encouraging, with a solid 22.5% gain so far this year and an impressive 89.2% return over the past five years.

That kind of trajectory hints at a business that is either riding big industry trends, attracting new investor attention, or simply correcting past undervaluations. There has been growing interest in the battery sector, particularly as renewables and electric vehicles spark more demand. While sentiment can shift quickly, risk perceptions tend to evolve in tandem with new opportunities or market headwinds. Recent developments affecting the battery landscape could be helping GS Yuasa stay relevant in investors’ minds, even if not directly triggering sharp price moves.

Now, if you’re looking for hard numbers, consider this: GS Yuasa currently scores a 5 out of 6 on our value checklist, suggesting the company is undervalued by most standard measures. That is a strong indicator that the fundamentals are potentially stronger than the market price reflects. But before you make any moves, it is important to break down what these valuation approaches actually mean and, even better, explore a smarter way to judge whether GS Yuasa is truly a buy.

Why GS Yuasa is lagging behind its peers

Approach 1: GS Yuasa Discounted Cash Flow (DCF) Analysis

The Discounted Cash Flow (DCF) model projects GS Yuasa’s future cash flows and calculates their value in today’s terms. This approach offers a way to gauge the company’s intrinsic value by forecasting how much cash it can generate and then discounting those projected amounts back to present value, all measured in Japanese Yen (¥).

Currently, GS Yuasa posted a last twelve months Free Cash Flow (FCF) of about -¥7,906 million, meaning the company saw negative cash flows most recently. Looking ahead, analyst forecasts suggest a turnaround, with yearly FCF estimates ramping up: ¥7,700 million projected in 2026 and growing to ¥51,200 million by 2030. After 2030, Simply Wall St’s methodology extrapolates further growth, reflecting sector optimism. These figures are all in millions, highlighting the anticipated scale-up in cash generation.

Using these projections, the DCF model estimates an intrinsic value of ¥9,113 per share. This result suggests that GS Yuasa is trading at a 64.5% discount to its fair value by this method, pointing to significant undervaluation at current levels.

Result: UNDERVALUED

Head to the Valuation section of our Company Report for more details on how we arrive at this Fair Value for GS Yuasa.

Our Discounted Cash Flow (DCF) analysis suggests GS Yuasa is undervalued by 64.5%. Track this in your watchlist or portfolio, or discover more undervalued stocks.

Approach 2: GS Yuasa Price vs Earnings

The Price-to-Earnings (PE) ratio is a widely used valuation tool for profitable companies like GS Yuasa because it directly compares the company’s market value to its net earnings. This provides a clear sense of how much investors are paying for each yen of profit. For established firms with consistent earnings, the PE ratio offers actionable insight into market expectations and company quality.

A normal or fair PE ratio is influenced by expectations for future growth and the perceived risks in the business or industry. Companies with high growth prospects or lower risk profiles generally warrant higher PE ratios. In contrast, those with slower growth or more uncertainty tend to trade at lower multiples.

GS Yuasa’s current PE ratio stands at 10.08x, just below the Auto Components industry average of 11.34x and its peer average of 10.94x. To provide a more tailored view, Simply Wall St calculates a proprietary Fair Ratio for GS Yuasa, which stands at 11.88x. The Fair Ratio reflects more than just broad market comparisons by considering the company’s unique earnings growth profile, profit margins, industry positioning, market capitalization, and risk factors. This approach aims to provide a more accurate benchmark than simply comparing to industry or peer averages.

Comparing the Fair Ratio of 11.88x with GS Yuasa’s actual PE of 10.08x, the stock appears to be undervalued using this metric and is trading below what would be expected for a company with its financial characteristics and outlook.

Result: UNDERVALUED

PE ratios tell one story, but what if the real opportunity lies elsewhere? Discover companies where insiders are betting big on explosive growth.

Upgrade Your Decision Making: Choose your GS Yuasa Narrative

Earlier we mentioned that there is an even better way to understand valuation, so let's introduce you to Narratives. A Narrative is simply your story about a company. It connects your view of GS Yuasa's future with numbers like fair value, projected growth, and profit margins. Narratives let you translate what you believe about the business into financial predictions, building a bridge from the company’s story to a potential share price.

Narratives are a powerful yet user-friendly feature on Simply Wall St’s Community page, used by millions of investors. They make it simple to compare your view against others, and to see if the current price is above or below the fair value implied by your assumptions so you know when to consider buying or selling. Importantly, Narratives adjust as soon as new information surfaces, such as earnings announcements or breaking news, keeping your analysis from going stale.

For example, when it comes to GS Yuasa, some investors see huge growth potential and assign a fair value well above today’s price, while others, concerned about sector challenges, see a much lower fair value. Narratives capture these differences instantly.

Do you think there's more to the story for GS Yuasa? Create your own Narrative to let the Community know!

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.

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