JAPAN MATERIAL And 2 Other Stocks That May Be Trading Below Fair Value

September 29, 2024

Japan’s stock markets have experienced notable gains recently, buoyed by optimism surrounding China’s stimulus measures and dovish commentary from the Bank of Japan. With the Nikkei 225 Index rising 5.6% and the TOPIX Index up 3.7%, investors are increasingly looking for opportunities in stocks that may be trading below their fair value. In this context, identifying undervalued stocks can present a compelling investment opportunity, especially when market conditions are favorable and economic indicators suggest potential growth.

Top 10 Undervalued Stocks Based On Cash Flows In Japan

Name	Current Price	Fair Value (Est)	Discount (Est)
Hagiwara Electric Holdings (TSE:7467)	¥3580.00	¥6803.36	47.4%
Densan System Holdings (TSE:4072)	¥2689.00	¥5311.46	49.4%
IMAGICA GROUP (TSE:6879)	¥519.00	¥1021.58	49.2%
Stella Chemifa (TSE:4109)	¥4220.00	¥8074.88	47.7%
Pilot (TSE:7846)	¥4496.00	¥8871.42	49.3%
Taiyo Yuden (TSE:6976)	¥3178.00	¥6080.61	47.7%
Hibino (TSE:2469)	¥3465.00	¥6926.53	50%
Appier Group (TSE:4180)	¥1836.00	¥3492.16	47.4%
NATTY SWANKY holdingsLtd (TSE:7674)	¥3215.00	¥6009.03	46.5%
Money Forward (TSE:3994)	¥5976.00	¥11866.18	49.6%

Click here to see the full list of 81 stocks from our Undervalued Japanese Stocks Based On Cash Flows screener.

Let's review some notable picks from our screened stocks.

JAPAN MATERIAL (TSE:6055)

Overview: JAPAN MATERIAL Co., Ltd. operates in the electronics and graphics businesses in Japan and has a market cap of ¥199.52 billion.

Operations: The company's revenue segments include Electronics with ¥47.65 billion, Graphics Solution Business with ¥1.56 billion, and Solar Power Generation Business with ¥206 million.

Estimated Discount To Fair Value: 29.2%

Japan Material, trading at ¥1942, is significantly undervalued based on its discounted cash flow (DCF) analysis with an estimated fair value of ¥2741.39. The company shows strong growth prospects with earnings expected to grow 24.27% annually, outpacing the Japanese market's forecasted 8.7%. Revenue growth is also robust at 14.7% per year compared to the market's 4.3%. However, the stock has experienced high volatility over the past three months and its return on equity is forecasted to be relatively low at 17.9% in three years.

TSE:6055 Discounted Cash Flow as at Sep 2024

BayCurrent Consulting (TSE:6532)

Overview: BayCurrent Consulting, Inc. offers consulting services in Japan and has a market cap of ¥819.30 billion.

Operations: BayCurrent Consulting, Inc. generates revenue primarily from providing consulting services within Japan.

Estimated Discount To Fair Value: 43.2%

BayCurrent Consulting, trading at ¥5400, is significantly undervalued based on its discounted cash flow (DCF) analysis with an estimated fair value of ¥9499.93. The company's earnings are forecast to grow 18.4% annually, surpassing the Japanese market's 8.7%. Revenue growth is also expected at 18.4% per year, higher than the market's 4.3%. However, despite strong profit growth forecasts and a high return on equity projection of 35.5% in three years, revenue growth remains below the significant threshold of 20%.

TSE:6532 Discounted Cash Flow as at Sep 2024

Funai Soken Holdings (TSE:9757)

Overview: Funai Soken Holdings Incorporated offers consulting services to manufacturing and retail businesses in Japan, with a market cap of ¥112.28 billion.

Operations: The company's revenue segments include Business Consulting at ¥22.26 billion, Digital Solutions at ¥5.20 billion, and Logistics Business at ¥4.48 billion.

Estimated Discount To Fair Value: 26.6%

Funai Soken Holdings is trading at ¥2422, significantly below its estimated fair value of ¥3300.1 based on discounted cash flow (DCF) analysis. The company's earnings are forecast to grow 9.31% annually, outpacing the Japanese market's 8.7%. Recent buybacks totaling ¥2.85 billion and a dividend increase to ¥37 per share highlight shareholder returns, though the dividend track record remains unstable. Despite slower revenue growth at 8.8%, it surpasses the market average of 4.3%.

TSE:9757 Discounted Cash Flow as at Sep 2024

Next Steps

Discover the full array of 81 Undervalued Japanese Stocks Based On Cash Flows right here.
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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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