A Look at MonotaRO’s (TSE:3064) Valuation After Strong October Sales Growth

MonotaRO (TSE:3064) just released its October 2025 sales numbers, showing revenue of JPY 29,423 million compared to JPY 25,354 million last year. That kind of year-on-year growth catches investor attention for good reason.

See our latest analysis for MonotaRO.

After MonotaRO’s strong October sales update, the market's response has been a mixed bag. The share price surged 7.8% over the last week, hinting at renewed optimism, but it is still down 11.2% year-to-date and the 1-year total shareholder return sits at -17.9%. Short-term momentum is building, even as the bigger picture reflects ongoing pressure.

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The recent jump in sales and a meaningful discount to analyst price targets invite deeper questions for investors. Is MonotaRO undervalued at current levels, or is the market already factoring in the next wave of growth?

Price-to-Earnings of 36.4x: Is it justified?

MonotaRO’s stock trades at a steep 36.4 times earnings, far above the last close price might suggest, and well ahead of both market and sector averages. This lofty valuation puts a spotlight on whether investors are expecting outsized earnings growth, or if the share price has run ahead of fundamentals.

The price-to-earnings (P/E) ratio shows how much investors are paying today for each yen of current earnings. For MonotaRO, a P/E of 36.4x suggests the market is pricing in strong future profits and sustained growth. However, such a premium can only be justified if earnings continue to accelerate meaningfully, which makes this ratio essential to monitor in these conditions.

Against its closest competitors in the JP Trade Distributors space, MonotaRO’s P/E is striking. It is more than triple the industry average of 10.1x, and much higher than the peer group average of 11.1x. Even when compared to its own estimated fair price-to-earnings ratio of 24.3x, the stock appears expensive. There is a risk that, if growth stumbles, the market may quickly reassess this premium valuation and bring the multiple closer to the sector benchmark.

Explore the SWS fair ratio for MonotaRO

Result: Price-to-Earnings of 36.4x (OVERVALUED)

However, persistent earnings volatility or a slowdown in annual revenue growth could quickly undermine sentiment and prompt investors to reconsider the stock’s high valuation.

Find out about the key risks to this MonotaRO narrative.

Another View: DCF Suggests Undervaluation

While the stock looks expensive by earnings multiples, our SWS DCF model offers a different perspective. This approach suggests MonotaRO is actually undervalued by around 17%, with shares trading below what discounted cash flows indicate is fair value. Are investors overlooking longer-term growth drivers?

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 MonotaRO 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 863 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 MonotaRO Narrative

If you want to dig deeper or have your own take, you can shape your personal MonotaRO narrative using the data in just a few minutes. Do it your way

A great starting point for your MonotaRO research is our analysis highlighting 3 key rewards and 1 important warning sign 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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