Link and Motivation Plus Two More Stocks Estimated To Be Undervalued On The Japanese Exchange

Amid rising concerns about tighter U.S. restrictions on semiconductor exports affecting Japanese technology stocks, Japan's stock markets experienced a downturn last week. This context sets the stage for exploring potentially undervalued stocks, like Link and Motivation, which may present interesting opportunities in such market conditions.

Top 10 Undervalued Stocks Based On Cash Flows In Japan

Name	Current Price	Fair Value (Est)	Discount (Est)
Persol HoldingsLtd (TSE:2181)	¥254.20	¥492.30	48.4%
Hibino (TSE:2469)	¥2704.00	¥5231.07	48.3%
West Holdings (TSE:1407)	¥2135.00	¥4140.75	48.4%
Micronics Japan (TSE:6871)	¥5930.00	¥11713.77	49.4%
Visional (TSE:4194)	¥7720.00	¥15165.83	49.1%
Macromill (TSE:3978)	¥874.00	¥1682.37	48%
Tri Chemical Laboratories (TSE:4369)	¥3685.00	¥7024.02	47.5%
Bushiroad (TSE:7803)	¥383.00	¥725.27	47.2%
PeptiDream (TSE:4587)	¥2743.50	¥5337.24	48.6%
Atrae (TSE:6194)	¥894.00	¥1716.66	47.9%

Click here to see the full list of 91 stocks from our Undervalued Japanese Stocks Based On Cash Flows screener.

Below we spotlight a couple of our favorites from our exclusive screener.

Link and Motivation (TSE:2170)

Overview: Link and Motivation Inc. operates in Japan, offering consulting and cloud services, with a market capitalization of approximately ¥54.04 billion.

Operations: The firm operates primarily in consulting and cloud services within Japan.

Estimated Discount To Fair Value: 45.4%

Link and Motivation, trading at ¥504, is significantly undervalued based on a discounted cash flow estimate of ¥923.1. The company's earnings have increased by 44.4% over the past year and are expected to grow by 18.38% annually, outpacing the Japanese market forecast of 8.9%. Additionally, its revenue growth projection of 10.4% annually also exceeds the market expectation of 4.3%. Recent strategic share buybacks underline management's confidence in value, repurchasing shares worth ¥428.63 million to enhance shareholder value.

• Insights from our recent growth report point to a promising forecast for Link and Motivation's business outlook.
• Click to explore a detailed breakdown of our findings in Link and Motivation's balance sheet health report.

en-japan (TSE:4849)

Overview: en-japan inc. operates in providing human resources services both domestically and internationally, with a market capitalization of approximately ¥112.70 billion.

Operations: The company generates revenue from its human resources services across both domestic and international markets.

Estimated Discount To Fair Value: 42.4%

En-japan, priced at ¥2760, is deemed undervalued with a fair value estimate of ¥4789.54 based on discounted cash flows. Its earnings are expected to grow by 17% annually, surpassing the Japanese market's 8.9%. Despite slower revenue growth projections of 8% annually, this still outpaces the market forecast of 4.3%. However, its dividend coverage is weak, not well-supported by earnings or free cash flow. Recently, en-japan reaffirmed its dividend at JPY 70.10 per share and provided a positive earnings guidance for FY2025.

• Our earnings growth report unveils the potential for significant increases in en-japan's future results.
• Delve into the full analysis health report here for a deeper understanding of en-japan.

LITALICO (TSE:7366)

Overview: LITALICO Inc. operates schools for learning and preschools in Japan, with a market capitalization of approximately ¥61.34 billion.

Operations: The firm focuses on educational services in Japan, specifically operating schools for learning and preschools.

Estimated Discount To Fair Value: 35.6%

LITALICO, trading at ¥1718, is valued below its estimated fair value of ¥2667.49, indicating a significant undervaluation based on cash flows. Its earnings are expected to grow by 12.56% annually, outpacing the Japanese market forecast of 8.9%. Despite strong past earnings growth of 115.6%, quality concerns arise from large one-off items affecting financial results. Recently, LITALICO announced a private placement expected to raise approximately ¥26.57 million in gross proceeds, enhancing its financial flexibility for future growth initiatives.

• Upon reviewing our latest growth report, LITALICO's projected financial performance appears quite optimistic.
• Unlock comprehensive insights into our analysis of LITALICO stock in this financial health report.

Taking Advantage

• Get an in-depth perspective on all 91 Undervalued Japanese Stocks Based On Cash Flows by using our screener here.
• Have a stake in these businesses? Integrate your holdings into Simply Wall St's portfolio for notifications and detailed stock reports.
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Ready For A Different Approach?

• Explore high-performing small cap companies that haven't yet garnered significant analyst attention.
• Diversify your portfolio with solid dividend payers offering reliable income streams to weather potential market turbulence.
• Fuel your portfolio with companies showing strong growth potential, backed by optimistic outlooks both from analysts and management.

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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