How Does Kubota’s Recent 9% Rally Align With Its True Value in 2025?

Trying to decide whether to add Kubota to your portfolio, hang on to the stock, or look for your next opportunity? You are far from alone. Kubota has been on the radar for many investors interested in global agriculture and equipment manufacturing. After a bumpy stretch over the past year, when the stock dropped by 7.5%, recent months have shown some positive momentum. Over just the last week, Kubota’s price rose by 2.9%, and over the last 30 days, it’s up a solid 9.1%. For long-term holders, there is also a modest gain, as shares climbed 14.7% over the past five years, even with some uneven patches along the way. Much of that volatility has been tied to broader market developments, such as shifting demand in the global agriculture sector and evolving policies affecting farm equipment investments.

For anyone weighing Kubota’s prospects, one big question looms: is the stock undervalued right now? To help answer that, we will walk through several valuation methods used by analysts and investors alike. Kubota currently earns a valuation score of 3 out of 6, reflecting areas of both strength and caution. But numbers only tell part of the story. Stay with me as we break down each approach and, in the end, explore a smarter way to assess value that often gets overlooked.

Why Kubota is lagging behind its peers

Approach 1: Kubota Discounted Cash Flow (DCF) Analysis

The Discounted Cash Flow (DCF) model estimates a company’s intrinsic value by projecting its future free cash flows and discounting them back to today. This aims to show what those future earnings are worth in present terms. For Kubota, analysts use a two-stage free cash flow to equity method. This approach takes near-term analyst estimates and then extrapolates further into the future.

Kubota’s latest trailing twelve months free cash flow stands at ¥112.8 billion. Over the next several years, analysts project relatively steady growth, expecting free cash flow to reach ¥111.9 billion by 2029. These projections, after discounting for time and risk, suggest a fair value per share of ¥1,246.37.

However, when comparing this intrinsic fair value to Kubota’s current share price, the DCF model implies that the stock is about 53.2% overvalued. In other words, if you rely on cash flow projections alone, Kubota’s shares appear priced well above what the fundamentals support at this time.

Result: OVERVALUED

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

Our Discounted Cash Flow (DCF) analysis suggests Kubota may be overvalued by 53.2%. Find undervalued stocks or create your own screener to find better value opportunities.

Approach 2: Kubota Price vs Earnings (PE)

For profitable companies like Kubota, the Price-to-Earnings (PE) ratio is a core valuation metric, as it directly relates a company’s current share price to its underlying earnings power. Investors often use this measure to gauge whether a stock is trading at a reasonable price, but what counts as “reasonable” can depend on many factors.

Essentially, a higher PE ratio can be justified for businesses with strong growth prospects or low risk, while a lower ratio may reflect slower growth or greater uncertainty. For Kubota, the current PE ratio stands at 12.6x. That is slightly below the Machinery industry average of 13.7x and well below the peer group average of 28.5x, suggesting the stock is priced more conservatively compared to its competitors.

However, straightforward comparisons can miss key details. That is where Simply Wall St’s “Fair Ratio” comes in. Unlike a simple peer or industry average, the Fair Ratio customizes what PE should be, after considering not just growth prospects and risks, but also aspects like Kubota’s profit margins, industry environment, and its market capitalization. For Kubota, the Fair Ratio is 20.8x, which is significantly higher than its actual PE. This suggests the company’s share price does not fully reflect its fundamentals, even factoring in relevant risks and sector dynamics.

In summary, since Kubota’s current PE is well below the Fair Ratio, the stock appears undervalued on this key measure.

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 Kubota Narrative

Earlier we mentioned that there is an even better way to understand valuation. Let us introduce you to Narratives. A Narrative is your personal take on a company; it is a story that connects your perspective on Kubota’s future (like revenue, profits, and margins) to a specific financial forecast and fair value. Narratives bridge the gap between data and insight by letting you clearly see how your assumptions play out in real numbers, making the company’s story both visual and practical.

Narratives are designed to be simple and accessible, and millions of investors use them right from the Community page on Simply Wall St's platform. They help guide your decisions by showing how your view of Kubota stacks up, comparing your Fair Value estimate to the latest market Price, and making it easier to decide when to buy or sell. As fresh news or earnings releases come in, Narratives update so your view always stays relevant.

For example, with Kubota, some investors see a prosperous road ahead and project a much higher Fair Value, while others anticipate challenges and set their estimate at the low end instead. Narratives make it easy to compare these perspectives so you can invest with more confidence.

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