Assessing Wacoal Holdings (TSE:3591) Valuation Following Major Share Buyback Completion

Wacoal Holdings (TSE:3591) just wrapped up a major tranche of its share buyback, purchasing over 1 million shares between July and September and completing its most recent repurchase program as planned.

See our latest analysis for Wacoal Holdings.

Wacoal Holdings’ latest buyback has come amid a period of renewed momentum for the stock, fueled by improved investor sentiment around its capital returns and operational resilience. While the share price has risen nearly 15% over the past 90 days, the bigger story lies in an impressive 27% total shareholder return over the past year and more than a tripling in value for long-term holders over five years. This signals that confidence may be building steadily.

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After such a surge in Wacoal Holdings’ performance and with recent buybacks boosting optimism, the key question is whether there is still hidden value left in the stock or if the market has already priced in all future growth.

Price-to-Earnings of 16.2x: Is it justified?

Wacoal Holdings shares currently trade at a price-to-earnings (P/E) ratio of 16.2x, noticeably higher than the JP Luxury industry average of 13.2x. This signals a premium valuation, with the last close at ¥5,695 per share.

The P/E multiple represents how much investors are willing to pay for each yen of earnings. For a company like Wacoal, this figure can reflect market optimism about future profitability, sector resilience, or a strong brand. In this case, the market is pricing in stronger performance or growth potential compared to typical industry peers.

However, relative to the sector, this valuation looks stretched. Notably, the current P/E of 16.2x is well above the industry norm and even exceeds an estimated fair price-to-earnings ratio of 5.3x. This disparity hints that the shares could be overvalued unless Wacoal delivers substantial future results that set it apart.

Explore the SWS fair ratio for Wacoal Holdings

Result: Price-to-Earnings of 16.2x (OVERVALUED)

However, slowing annual revenue growth and a sharp decline in net income may challenge the bullish view. This could introduce downside risk to future returns.

Find out about the key risks to this Wacoal Holdings narrative.

Another View: What Does the DCF Model Say?

Taking a different approach, the Simply Wall St DCF model estimates Wacoal Holdings’ fair value at around ¥3,916 per share, which is well below the current price. This suggests the shares could be substantially overvalued based on future cash flow projections. Are investors too optimistic, or does the market see something the model misses?

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 Wacoal Holdings 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 Wacoal Holdings Narrative

If you have a different perspective or want to dig into the figures yourself, you can build your own custom view in just a few minutes. Do it your way

A great starting point for your Wacoal Holdings research is our analysis highlighting 1 key reward and 2 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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