A Look at Hachijuni Bank’s (TSE:8359) Valuation Following Its Recently Completed Share Buyback

Hachijuni Bank (TSE:8359) has just wrapped up a substantial round of share buybacks, completing the repurchase of 1.02% of its outstanding shares as previously announced in May. This move highlights management’s ongoing capital allocation strategy.

See our latest analysis for Hachijuni Bank.

The recently completed buyback comes as Hachijuni Bank’s share price has cooled a bit in recent weeks, down over 6% in the past month. However, momentum over the long run remains impressive. While short-term swings are part of the story, the bank’s 39.9% share price return year-to-date and exceptional 68.7% total shareholder return over the past year highlight just how strong performance has been for investors.

If you’re curious where else confident capital moves are shaping the market, now is an ideal time to broaden your search and discover fast growing stocks with high insider ownership

The big question now is whether Hachijuni Bank’s robust returns and buybacks signal an undervalued opportunity for investors, or if today’s price already reflects expectations for future growth ahead. Is there value left to capture?

Price-to-Earnings of 12.2x: Is it justified?

Hachijuni Bank trades at a price-to-earnings (P/E) ratio of 12.2x, which is below the broader Japanese market average of 14.4x and also lower than its peer average of 14.6x. It is, however, above the domestic banks industry average of 10.7x. This suggests the market is pricing in some advantages over nearby competitors but not assigning a hefty premium.

The P/E ratio shows how much investors are willing to pay today for a unit of the company's current earnings. For banks like Hachijuni, this multiple often reflects not just recent growth, but also investor confidence in the sustainability of profits and potential for further expansion.

Although the current P/E ratio is favorable compared to the market and peer averages, it is somewhat elevated versus the banking sector overall. Nevertheless, regression models indicate that a fair P/E ratio for Hachijuni Bank should be around 13.5x. If the market takes note of the bank’s consistent profit improvement, the valuation could edge higher toward this fair level.

Explore the SWS fair ratio for Hachijuni Bank

Result: Price-to-Earnings of 12.2x (UNDERVALUED)

However, risks remain if growth slows or if the stock continues to trade below analyst targets. This could potentially challenge the case for further upside.

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

Another View: Our DCF Model Challenges the Undervaluation Story

While the current ratio points toward undervaluation, our SWS DCF model tells a different story. Based on future cash flow estimates, Hachijuni Bank is actually trading above its estimated fair value. This suggests the market may already be pricing in a lot of 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 Hachijuni 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 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 Hachijuni Bank Narrative

If you want to dig into the data and form your own perspective, you can build your personal narrative in just a few minutes, and Do it your way.

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

Looking for more investment ideas?

Don’t let the next wave of opportunities pass you by. Make your portfolio future-ready with these handpicked stock ideas you can filter and act on today.

• Unlock consistent income streams by checking out these 18 dividend stocks with yields > 3% with yields above 3%, a strategy that can help strengthen your portfolio's cash flow potential.
• Capture the rise of artificial intelligence by searching for market innovators among these 25 AI penny stocks, where breakthrough tech is shaping tomorrow’s biggest winners.
• Accelerate your gains with these 3579 penny stocks with strong financials that combine strong financials and rapid growth. Don’t miss your chance before others spot them.

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.

Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team@simplywallst.com