Is Makita Corporation (TSE:6586) Potentially Undervalued?

Makita Corporation (TSE:6586), is not the largest company out there, but it saw significant share price movement during recent months on the TSE, rising to highs of JP¥5,056 and falling to the lows of JP¥4,508. Some share price movements can give investors a better opportunity to enter into the stock, and potentially buy at a lower price. A question to answer is whether Makita's current trading price of JP¥4,700 reflective of the actual value of the mid-cap? Or is it currently undervalued, providing us with the opportunity to buy? Let’s take a look at Makita’s outlook and value based on the most recent financial data to see if there are any catalysts for a price change.

View our latest analysis for Makita

What's The Opportunity In Makita?

According to our valuation model, Makita seems to be fairly priced at around 5.3% below our intrinsic value, which means if you buy Makita today, you’d be paying a fair price for it. And if you believe that the stock is really worth ¥4964.64, then there’s not much of an upside to gain from mispricing. Furthermore, Makita’s low beta implies that the stock is less volatile than the wider market.

Can we expect growth from Makita?

Future outlook is an important aspect when you’re looking at buying a stock, especially if you are an investor looking for growth in your portfolio. Buying a great company with a robust outlook at a cheap price is always a good investment, so let’s also take a look at the company's future expectations. Makita's earnings over the next few years are expected to increase by 24%, indicating a highly optimistic future ahead. This should lead to more robust cash flows, feeding into a higher share value.

What This Means For You

Are you a shareholder? It seems like the market has already priced in 6586’s positive outlook, with shares trading around its fair value. However, there are also other important factors which we haven’t considered today, such as the financial strength of the company. Have these factors changed since the last time you looked at the stock? Will you have enough confidence to invest in the company should the price drop below its fair value?

Are you a potential investor? If you’ve been keeping an eye on 6586, now may not be the most advantageous time to buy, given it is trading around its fair value. However, the optimistic prospect is encouraging for the company, which means it’s worth diving deeper into other factors such as the strength of its balance sheet, in order to take advantage of the next price drop.

It can be quite valuable to consider what analysts expect for Makita from their most recent forecasts. At Simply Wall St, we have the analysts estimates which you can view by clicking here.

If you are no longer interested in Makita, you can use our free platform to see our list of over 50 other stocks with a high growth potential.

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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.