YASKAWA Electric (TSE:6506): Assessing Valuation Following Raised Full-Year Earnings Guidance

YASKAWA Electric (TSE:6506) raised its full-year earnings guidance, projecting higher revenue, operating profit, and net profit for the year ending February 2026. Such upward revisions usually signal management’s confidence in current business momentum.

See our latest analysis for YASKAWA Electric.

The raised earnings guidance has clearly energized sentiment, with YASKAWA Electric’s share price jumping 35.8% over the past 30 days and momentum carrying through this past week. Even with this surge, the total shareholder return over one year still sits nearly 10% lower. This shows both the challenges and the potential for a longer-term turnaround in perception.

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With shares rallying and management projecting stronger results, the key question is whether YASKAWA Electric is still trading below its true value or if the market is already factoring in all expected growth from this point forward.

Price-to-Earnings of 18.5x: Is it justified?

YASKAWA Electric is currently trading at a price-to-earnings (P/E) ratio of 18.5x, set against a last close of ¥4085. This puts it below the peer average but above the industry average, suggesting mixed signals on relative value.

The P/E ratio measures how much investors are willing to pay per yen of earnings, reflecting growth prospects and profitability. For YASKAWA Electric, this is key as it provides insight into how the market values its past and expected earnings amid recent business momentum.

Digging deeper, the stock appears attractively valued when compared to its peers. The average P/E in the peer group is 20.8x, making YASKAWA Electric look like a bargain based on earnings alone. However, its P/E is significantly higher than the broader JP Machinery industry average of 13.2x, which may indicate the market is factoring in higher growth or unique qualities. Compared to its estimated fair price-to-earnings ratio of 20.9x, there is also room for the valuation to align more closely with historical relationships among such stocks.

Explore the SWS fair ratio for YASKAWA Electric

Result: Price-to-Earnings of 18.5x (ABOUT RIGHT)

However, slowing net income growth and a current share price above analyst targets could challenge optimism if performance does not accelerate in the coming quarters.

Find out about the key risks to this YASKAWA Electric narrative.

Another View: Discounted Cash Flow (DCF) Signals Overvaluation

While earnings multiples present YASKAWA Electric as fairly valued or even attractive, our SWS DCF model tells a different story. According to this method, the current share price is trading well above its estimated fair value. This raises questions about whether the recent optimism can be supported by underlying cash flows.

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 YASKAWA Electric 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 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 YASKAWA Electric Narrative

If you see the numbers differently or want to test your own perspective, you can quickly create your own narrative and reach your own conclusions. Do it your way Do it your way

A great starting point for your YASKAWA Electric research is our analysis highlighting 1 key reward and 3 important warning signs 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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