Kubota (TSE:6326) Valuation in Focus After Guidance Revision and Q3 Earnings Update

Kubota (TSE:6326) updated investors with fresh earnings results for the third quarter and, notably, lowered its full-year guidance. This combination puts a spotlight on how management is navigating changing market dynamics in 2025.

See our latest analysis for Kubota.

Kubota’s share price jumped nearly 3% on earnings day, despite trimming its full-year guidance, and now sits up over 17% in the last three months. Looking at the bigger picture, its 1-year total shareholder return of 12% shows solid gains for longer-term investors. Recent momentum suggests renewed interest following a mixed but eventful year.

If Kubota’s shift in fortunes has you rethinking your watchlist, now is a prime opportunity to discover fast growing stocks with high insider ownership

With Kubota’s upbeat recent returns and management’s cautious outlook, the big question is whether the current share price still offers value, or if investors are already factoring in all the future growth ahead.

Price-to-Earnings of 13.5x: Is it justified?

Kubota’s share price of ¥2,066 is trading well below the average peer Price-to-Earnings ratio, signaling relative value for investors taking a comparative approach.

The Price-to-Earnings (P/E) ratio measures what investors are willing to pay today for every ¥1 of the company's earnings. For a diversified machinery and capital goods manufacturer like Kubota, this multiple sheds light on how the market views its income potential compared to competitors.

At 13.5x, Kubota's P/E is significantly lower than the peer average of 20.6x. This makes it look attractively priced on this measure. Notably, this ratio is also below the estimated fair Price-to-Earnings of 22.5x. This suggests there is considerable room for the market to re-rate Kubota in line with industry standards if fundamentals improve.

Explore the SWS fair ratio for Kubota

Result: Price-to-Earnings of 13.5x (UNDERVALUED)

However, slowing revenue growth or unexpected swings in net income could challenge bullish sentiment and lead to a reassessment of Kubota’s valuation.

Find out about the key risks to this Kubota narrative.

Another View: What Does the SWS DCF Model Say?

While Kubota’s earnings multiple paints a picture of value versus peers, our DCF model tells a different story. According to the SWS DCF approach, the stock is trading well above its estimated fair value of ¥1,261. This suggests it may actually be overvalued at current prices. Could the market be overlooking risks that the DCF model captures?

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 Kubota 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 908 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 Kubota Narrative

If you see things differently or want to dive deeper into Kubota’s story, you can build and share your own view in just a few minutes, so Do it your way

A great starting point for your Kubota 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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