Assessing Mebuki Financial Group (TSE:7167) Valuation Following Completion of Share Buyback Program

Mebuki Financial GroupInc (TSE:7167) has wrapped up its latest share buyback, acquiring 2,791,400 shares for around ¥2,669.6 million. The buyback, which ran from early October to mid-November, is now completed.

See our latest analysis for Mebuki Financial GroupInc.

The recent buyback has brought fresh attention to Mebuki Financial GroupInc, which has been on a roll. Its year-to-date share price return sits at an impressive 46.87%, and the total shareholder return over the past year is 47.34%. Despite a few short-term dips, long-term momentum remains strong, hinting at growing investor confidence in the company’s outlook.

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But with shares up nearly 47% this year and trading just below analyst targets, the real question for investors is whether Mebuki Financial GroupInc remains undervalued or if the market has already priced in the growth ahead.

Price-to-Earnings of 12.6x: Is it justified?

Mebuki Financial GroupInc trades at a price-to-earnings (P/E) ratio of 12.6x, a touch below the broader Japanese market’s average but above the banking sector’s norm. At the last close of ¥938.2, the stock looks attractively valued relative to most peers. However, investors should probe deeper to see if growth justifies the uptick.

The P/E ratio shows how much investors are willing to pay for each yen of earnings. This is a critical measure for banks, as it reflects expectations for future profitability. A higher P/E can signal optimism or suggest that stronger-than-average growth is anticipated.

In Mebuki’s case, the company’s P/E multiple outpaces the JP Banks industry average of 10.3x. However, it remains well below the peer group’s average of 14.9x and comfortably lower than the fair value P/E, estimated at 14.1x. This is a level the market could converge towards if momentum continues.

Explore the SWS fair ratio for Mebuki Financial GroupInc

Result: Price-to-Earnings of 12.6x (ABOUT RIGHT)

However, slowing revenue growth or an unexpected downturn in net income could quickly shift sentiment and challenge the bullish outlook for Mebuki Financial Group Inc.

Find out about the key risks to this Mebuki Financial GroupInc narrative.

Another View: What Does the SWS DCF Model Say?

While multiples might suggest Mebuki Financial GroupInc is attractively priced, our DCF model tells a different story. It estimates the fair value at ¥821.21, meaning shares are trading above what the company's projected cash flows imply. Could the current price be reflecting too much optimism?

Look into how the SWS DCF model arrives at its fair value.

Simply Wall St performs a discounted cash flow (DCF) on every stock in the world every day (check out Mebuki Financial GroupInc for example). We show the entire calculation in full. You can track the result in your watchlist or portfolio and be alerted when this changes, or use our stock screener to discover 909 undervalued stocks based on their cash flows. If you save a screener we even alert you when new companies match - so you never miss a potential opportunity.

Build Your Own Mebuki Financial GroupInc Narrative

If you see the story differently or want to dig deeper into the numbers, you can explore the data and build your own view in just a few minutes. Do it your way

A great starting point for your Mebuki Financial GroupInc research is our analysis highlighting 3 key rewards and 2 important warning signs that could impact your investment decision.

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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.

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