Has Hitachi’s Five Year 540% Surge Left Much Value on the Table for 2025?

• If you are wondering whether Hitachi stock still offers value after its huge run, you are not alone. This article will walk through exactly what the current price is baking in.
• The shares have cooled off slightly, down about 5.1% over the last month, but they are still up 24.8% year to date and an impressive 540.5% over five years. This naturally raises questions about how much upside is left versus the risk of a pullback.
• Investor attention has been anchored on Hitachi's ongoing transformation toward digital and infrastructure solutions, including its push into data centers and social innovation businesses. This has reshaped how the market thinks about its long term growth profile. At the same time, portfolio streamlining and a greater focus on high margin, high return segments have supported a re rating of the stock. This helps explain why the share price has been so resilient even after such a strong multi year run.
• Despite that enthusiasm, Hitachi currently scores just 1/6 on our valuation checks. We will unpack what different valuation methods say about the stock, and then finish by looking at a more holistic way to think about its true long term value.

Hitachi scores just 1/6 on our valuation checks. See what other red flags we found in the full valuation breakdown.

Approach 1: Hitachi Discounted Cash Flow (DCF) Analysis

A Discounted Cash Flow model estimates what a company is worth by projecting the cash it can generate in the future, then discounting those cash flows back to today in ¥ terms.

For Hitachi, the latest twelve month Free Cash Flow is about ¥1.20 trillion, indicating a sizable cash generating base. Analysts provide detailed forecasts for the next few years, with Simply Wall St then extrapolating further to build a 2 stage Free Cash Flow to Equity model. Under this approach, projected Free Cash Flow in 2035 is around ¥0.79 trillion, reflecting a modest decline from current levels as growth normalizes over time.

Discounting all these projected cash flows back to today leads to an estimated intrinsic value of roughly ¥3,500 per share. Compared with the current market price, this implies the stock is about 41.6% above what the DCF suggests is reasonable, which points to meaningful overvaluation on this framework.

Result: OVERVALUED

Our Discounted Cash Flow (DCF) analysis suggests Hitachi may be overvalued by 41.6%. Discover 917 undervalued stocks or create your own screener to find better value opportunities.

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

Approach 2: Hitachi Price vs Earnings

For profitable companies like Hitachi, the Price to Earnings ratio is a useful way to gauge valuation because it directly links what investors are paying to the profits the business is generating today. In general, faster growing, less risky companies can justify a higher PE ratio, while slower growth or higher uncertainty should translate into a lower, more conservative multiple.

Hitachi currently trades on a PE of about 28.2x, which is more than double both the Industrials sector average of roughly 12.3x and the peer group average of around 12.3x. On the surface, that makes the stock look expensive relative to its industry and direct competitors. However, Simply Wall St’s Fair Ratio framework goes a step further by estimating what PE multiple a company should trade on, given its earnings growth outlook, profitability, risk profile, industry and market capitalization. For Hitachi, this Fair Ratio is a much higher 35.2x, implying that the market is not fully reflecting its fundamentals.

Compared with this Fair Ratio, Hitachi’s current PE suggests the shares are undervalued on a growth and quality adjusted basis.

Result: UNDERVALUED

PE ratios tell one story, but what if the real opportunity lies elsewhere? Discover 1443 companies where insiders are betting big on explosive growth.

Upgrade Your Decision Making: Choose your Hitachi Narrative

Earlier we mentioned that there is an even better way to understand valuation, so let us introduce you to Narratives, a simple way to attach your story about a company to the numbers, by turning your assumptions about Hitachi’s future revenue, earnings and margins into a concrete forecast and Fair Value estimate that you can compare with today’s price.

A Narrative on Simply Wall St’s Community page links three things together: the business story you believe, the financial forecast that flows from it, and the Fair Value that falls out of those assumptions, so you can easily see whether your view says Hitachi is a buy, hold or sell at current levels.

Because Narratives are updated dynamically as new news, earnings and guidance come in, they stay aligned with reality and help you react quickly when the gap between Fair Value and market price widens or closes.

For example, one Hitachi Narrative might focus on accelerating grid modernization, AI driven digital services and improving margins to support a Fair Value near ¥5,400. A more cautious Narrative might stress cost inflation, competition and cyclical risk and land closer to ¥3,900, giving you a clear, side by side view of how different perspectives translate into different target prices.

Do you think there's more to the story for Hitachi? Head over to our Community to see what others are saying!

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