Is There an Opportunity in Sojitz After Its Five Year 316% Share Price Jump?

If you’ve ever wondered whether to buy, hold, or let go of Sojitz stock, you’re not alone. With share prices moving like they have in the past year, the case for both optimism and caution is stronger than ever. While there’s been a modest dip of -2.6% in the last week and a -2.8% slide over a month, what really stands out is the impressive long-term run: up nearly 20% over the past year and an eye-opening 316% in five years. Even factoring in shorter-term volatility, Sojitz has quietly established itself as one of the more dynamic performers among Japanese trading houses.

What’s behind these moves? While nothing headline-grabbing has hit the news wires in recent weeks, many investors have pointed to evolving market sentiment about global trade, resources, and supply chain resilience, all of which have played into the hands of general trading companies like Sojitz. That has led to shifting risk perceptions, with some traders seizing short-term profits and others taking long-term bets on continued growth.

But here’s the big question: Is Sojitz undervalued, fairly priced, or already expensive after this huge run-up? According to our latest valuation scorecard, Sojitz scores a 3 out of 6 for undervaluation. That means it passes half of the main value checks, but there is still room for debate.

Let’s dive into the numbers, unpack the valuation approaches everyone talks about, and see how they stack up. Stick around, because at the end of this article, I’ll share a smarter, more holistic way to think about Sojitz’s real worth.

Why Sojitz is lagging behind its peers

Approach 1: Sojitz Discounted Cash Flow (DCF) Analysis

The Discounted Cash Flow (DCF) model estimates a company's value by projecting its future cash flows and then discounting those estimates back to today's value. This approach aims to capture not just where a company is right now, but also where it is expected to go in terms of generating cash for shareholders.

For Sojitz, the latest reported Free Cash Flow (FCF) stands at -¥49.5 billion, reinforcing how volatile cash generation can be in trading businesses. Analyst estimates suggest improvements ahead, with FCF projected to reach ¥54.0 billion by fiscal year ending March 2030. While these figures only account for the first five years using analyst input, the following years are extrapolated, showing a gradual upward trend. By 2035, forecasts reach about ¥72.3 billion, with all values kept in yen for consistency.

Based on these projections, the DCF calculation yields an intrinsic value of ¥2,613 per share. Comparing this to Sojitz’s current price, the model signals the shares are about 48.0% overvalued at the moment.

Result: OVERVALUED

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

Our Discounted Cash Flow (DCF) analysis suggests Sojitz may be overvalued by 48.0%. Find undervalued stocks or create your own screener to find better value opportunities.

Approach 2: Sojitz Price vs Earnings (PE Ratio)

For companies with steady profits, the price-to-earnings (PE) ratio remains one of the most trusted ways to gauge whether shares are attractively valued. The PE ratio compares a company’s current share price to its per-share earnings. This essentially quantifies how much investors are willing to pay for a yen of Sojitz’s profit. Naturally, higher growth prospects and better risk profiles often justify a “normal” or “fair” PE ratio that is higher than sluggish, riskier peers.

Sojitz currently trades on a PE ratio of 7.4x, which is noticeably lower than the trade distributors industry average of 10.0x and well below the peer group average of 15.0x. While at first glance this discount might appear significant, it does not always tell the full story given differences in growth rates, profitability, or structural industry challenges from company to company.

This is where Simply Wall St’s “Fair Ratio” comes in. The Fair Ratio for Sojitz is calculated at 16.1x. This figure blends in the company’s projected earnings growth, industry outlook, profit margins, company size, and risk. Unlike simple peer or industry comparisons, this proprietary metric paints a more tailored and complete picture of what Sojitz’s valuation should look like in context.

With Sojitz’s current PE (7.4x) well below its Fair Ratio (16.1x), the numbers suggest shares are meaningfully undervalued based on their fundamentals and the broader environment.

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 Sojitz 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, your belief about its potential, grounded in your own assumptions for fair value, future revenue, earnings, and margins, and how these evolve over time. Narratives connect the dots between a company's background, the financial numbers you expect, and the resulting fair value, making it far easier to see the logic behind any investment decision.

On Simply Wall St’s Community page, millions of investors use Narratives to build and share their views, transforming complex analysis into accessible, dynamic storylines. Narratives empower you to decide when to buy or sell by letting you clearly compare your Fair Value against the market Price. As new news or earnings data arrives, Narratives refresh automatically based on the latest outlook, so your decision-making stays up to date.

For example, with Sojitz, some investors may believe its expansion into chemicals and renewables will drive growth and set a fair value as high as ¥5,000, while more cautious analysts focus on risks and price in a fair value closer to ¥3,860. Narratives help you see and adapt your own story, bridging confidence with numbers as the facts evolve.

Do you think there's more to the story for Sojitz? 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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