How Should Investors View Hitachi’s Valuation After Major Stock Gains in 2025?

If you are watching Hitachi and wondering whether now is the right time to buy, hold, or just keep an eye on this powerhouse, you are not alone. Over the last five years, Hitachi's stock price has soared an astonishing 571.2%, handily outpacing major indexes and catching the eye of long-term growth investors. Even this year, shares are up another 12.6% year-to-date, rising a remarkable 13.8% just in the last week. Clearly, the market is paying attention, and there is no shortage of chatter about what comes next.

Several themes have supported Hitachi's momentum. These include global investment in infrastructure, digital transformation across industries, and a renewed focus on energy and railway systems where Hitachi has a strong presence. While these factors help explain the long-term strength in the stock, they also raise a big question: with all this growth and optimism, is Hitachi still undervalued, or are investors already pricing in all the good news?

Based on our analysis, Hitachi currently has a valuation score of 1 out of 6, suggesting it appears undervalued by only one major check we use to gauge company value. However, numbers never tell the whole story. Coming up, we will break down exactly how analysts assess valuation, what methods matter most, and conclude with an even better way to think about what Hitachi might really be worth.

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

The Discounted Cash Flow (DCF) model estimates what a business is worth by projecting its future cash flows and discounting them back to today's value. This approach helps analysts determine whether a company's current share price reflects its true underlying value, based on the money it is expected to generate in the years ahead.

For Hitachi, the most recent Free Cash Flow (FCF) reported was ¥1,086.5 billion, indicating the company remains a sizable cash generator. Analyst estimates project FCFs for the next five years, with figures ranging between ¥641 billion and ¥819 billion each year. Projections beyond this, extrapolated by Simply Wall St, anticipate annual FCFs will continue to grow and reach ¥976.0 billion by 2035. All these figures are in Japanese yen and reflect the company's ability to sustain high levels of profitability.

After discounting these expected cash flows, the DCF model calculates an intrinsic fair value of ¥3,920 per share for Hitachi. Comparing this to the current share price, the model suggests that the stock is 14.1% above its intrinsic value, which means it appears overvalued by this measure.

Result: OVERVALUED

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

Our Discounted Cash Flow (DCF) analysis suggests Hitachi may be overvalued by 14.1%. Find undervalued stocks or create your own screener to find better value opportunities.

Approach 2: Hitachi Price vs Earnings

The price-to-earnings (PE) ratio is widely considered the most meaningful valuation metric for profitable companies such as Hitachi, because it directly relates the company’s market value to its actual earnings. This makes it an effective shorthand for understanding how much investors are willing to pay today for a single yen of Hitachi’s profits.

When evaluating a PE ratio, it is important to remember that companies with faster expected earnings growth, superior margins, or lower perceived risk usually command higher PE multiples. Conversely, riskier or slow-growth firms trade at lower PE ratios. So, simply knowing the current PE is not enough. Context matters.

Hitachi currently trades at 32.08x earnings, which is well above both the Industrials industry average of 12.52x and its peers’ average of 15.32x. This suggests that the market is pricing in strong growth or other positive attributes. However, benchmarks like the peer and industry averages do not always reflect a company’s unique circumstances.

This is where Simply Wall St's proprietary “Fair Ratio” comes in. This fair PE multiple, calculated at 37.91x for Hitachi, incorporates factors such as the company’s expected earnings growth, profit margins, market cap, sector trends, and risk profile. By focusing on these specifics rather than broad industry averages, it provides a more nuanced and individualized valuation framework.

Because Hitachi’s current PE of 32.08x is moderately below its Fair Ratio of 37.91x, the shares appear slightly undervalued when judged by metrics that matter most.

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 Hitachi Narrative

Earlier we mentioned that there is an even better way to understand valuation, so let’s introduce you to Narratives. A Narrative is more than just a set of numbers; it’s your personal story or thesis about a company, weaving together what you believe about its business prospects with your own financial assumptions, such as fair value and future growth estimates.

Narratives help you connect the dots from a company’s story, to a financial forecast, and finally to a fair value, enabling a holistic and tailored investment decision. Through Simply Wall St’s Community page, millions of investors can easily use Narratives to frame their own perspectives and see a real-time estimate of what a company is truly worth, based on their beliefs.

By comparing your Narrative’s Fair Value to today’s market price, Narratives empower you to decide when it makes sense to buy, sell, or hold shares. Plus, they dynamically update as new data such as earnings, news, or corporate changes emerge, so your view stays relevant.

For example, some investors see Hitachi’s potential in powering global electrification and digital transformation, projecting a fair value as high as ¥5,300 per share. Others focus on margin risks and set a much lower fair value of ¥3,900. Each Narrative uniquely reflects its author’s outlook and supports smarter, more confident decisions.

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

Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team@simplywallst.com