Suruga Bank (TSE:8358): Assessing Valuation as Dividend Forecasts and Earnings Guidance Are Raised

Suruga Bank (TSE:8358) announced an increase to its second quarter-end and full-year dividend forecasts, and also provided new earnings guidance for the coming fiscal year. The higher dividend signals management’s outlook on growth and returns.

See our latest analysis for Suruga Bank.

Suruga Bank’s recent jump in quarterly and annual dividend forecasts has added fuel to investor optimism, sending the stock higher over the year. With a 38.5% share price return year-to-date and a remarkable 63.3% one-year total shareholder return, the momentum is clearly building, driven by surging confidence in both earnings prospects and capital returns.

If Suruga’s run has you thinking about what else could be gaining strength, now is a great time to broaden your search and discover fast growing stocks with high insider ownership

But with shares up so sharply and investor sentiment running high, the question remains: Is Suruga Bank still undervalued at current levels, or is the recent growth story already fully priced in?

Price-to-Earnings of 10.9x: Is it justified?

At a price-to-earnings (P/E) ratio of 10.9x, Suruga Bank’s shares are trading at a discount to peers, even after the recent surge. The last close was ¥1,579, positioning the stock below both the peer average P/E and analysts’ fair value benchmarks.

The P/E ratio measures how much investors are willing to pay for each yen of current earnings. For a bank like Suruga, it reflects expectations around future profits, sector risk, and growth. A lower-than-average P/E could signal attractive value if earnings growth is robust.

Suruga Bank’s P/E of 10.9x is lower than the peer average of 11.9x. This suggests the market is pricing in more conservatism or undervaluing recent earnings momentum. Relative to the estimated fair P/E of 11.3x, the current valuation implies room for the market to adjust upward if performance holds.

Explore the SWS fair ratio for Suruga Bank

Result: Price-to-Earnings of 10.9x (UNDERVALUED)

However, modest revenue growth and recent annual declines highlight that continued outperformance is not guaranteed if fundamentals fail to pick up.

Find out about the key risks to this Suruga Bank narrative.

Another View: What Does the DCF Say?

Taking a different approach, the SWS DCF model estimates Suruga Bank's fair value at ¥1,742.86. This is about 9.4% above the current share price and suggests the stock could still be undervalued, even after a rapid run-up and recent bullish sentiment. Could the market be underestimating further upside?

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 Suruga Bank 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 916 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 Suruga Bank Narrative

If you think a different story could be told, or prefer to dig into the numbers your own way, you can build a custom narrative in minutes using Do it your way.

A great starting point for your Suruga Bank research is our analysis highlighting 3 key rewards and 3 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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