Wacoal Holdings (TSE:3591): Examining Valuation After Upgraded Earnings Forecast and Dividend Reaffirmation

Wacoal Holdings (TSE:3591) caught investor attention after revising its consolidated earnings guidance for fiscal 2026. The company also reaffirmed a second quarter dividend of JPY 50.00 per share. These updates signal management’s confidence in the year ahead.

See our latest analysis for Wacoal Holdings.

The upbeat guidance and dividend reaffirmation appear to have sparked renewed optimism, with Wacoal Holdings’ share price rallying 2.2% in the last session. While this marks a short-term bounce, the stock’s 1-year total shareholder return stands at 8.2%, and long-term holders have seen remarkable gains of more than 180% over five years. This momentum suggests plenty of investors still see longer-term value.

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But with the company’s recent rally and updated forecasts, investors may wonder if Wacoal Holdings is still trading at an attractive discount or if the market has already priced in its next chapter of growth.

Price-to-Earnings of 23.7x: Is it justified?

Wacoal Holdings currently trades at a price-to-earnings (P/E) ratio of 23.7x based on the latest close. This figure is slightly higher than the peer average, signaling that the share price is demanding a premium compared to similar companies in the sector.

The price-to-earnings ratio measures how much investors are willing to pay today for a yen of earnings. For companies like Wacoal Holdings, which have seen a sharp earnings boost recently, a higher P/E may reflect expectations for further growth, stability, or other positive factors.

However, at 23.7x, the market is paying more for Wacoal's earnings than both its peer group average (23.1x) and the broader Japanese Luxury industry average (14.9x). This suggests the shares are trading at an even richer valuation benchmark. In addition, compared to the estimated Fair Price-to-Earnings Ratio of 6.8x, there is a substantial departure from what statistical models suggest could be a more justified level for the stock.

Explore the SWS fair ratio for Wacoal Holdings

Result: Price-to-Earnings of 23.7x (OVERVALUED)

However, if these trends continue, slowing annual revenue growth and a sharp decline in net income may challenge Wacoal Holdings’ premium valuation.

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

Another View: What Does the SWS DCF Model Say?

Looking from a different angle, our SWS DCF model suggests that Wacoal Holdings is actually trading above its fair value. The current price is ¥5,048 compared to a fair value estimate of ¥3,958.84. Does this mean the market’s outlook is outpacing realistic growth expectations?

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 927 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 prefer reaching your own conclusions, you can dive into the numbers and build your own 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 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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