ASICS (TSE:7936): Assessing Valuation After Recent Share Price Dip

ASICS (TSE:7936) shares have shown some interesting movement lately, catching the eye of investors curious about the longer-term momentum in this well-known athletic brand. The stock’s performance raises questions about potential shifts ahead.

See our latest analysis for ASICS.

After some strong gains earlier in the year, ASICS shares have recently pulled back, with a 1-week share price return of -5.78 percent and a 1-month return of -4.40 percent. Still, momentum remains robust in the bigger picture, with the total shareholder return up a remarkable 43.36 percent over the past twelve months and running above 500 percent for three years. These are clear signs that long-term investors have seen significant rewards even as short-term volatility returns.

If you want to see what else the market’s rewarding lately, broaden your investing lens and check out fast growing stocks with high insider ownership

This recent dip raises a key question for investors: Is ASICS currently undervalued given its strong fundamentals, or has the market already priced in future growth, leaving little room for further upside?

Price-to-Earnings of 35.4x: Is it justified?

ASICS currently trades at a price-to-earnings (P/E) ratio of 35.4x, which looks elevated compared to both market and industry benchmarks. With the last close at ¥3,715, this steep multiple raises questions about whether investors are pricing in too much future growth.

The price-to-earnings ratio measures how much investors are willing to pay today for each ¥1 of earnings. For a consumer durables brand like ASICS, a high P/E can signal growth optimism but may also indicate overvaluation if not supported by sustained profit expansion.

Compared to its peer average of 14.1x and a calculated fair P/E ratio of 23.6x, ASICS’s current multiple is much higher. This significant premium suggests the market believes in strong earnings momentum, but it may also be overlooking risks or getting ahead of itself. If valuations return to the fair ratio level, there could be downward pressure on the share price.

Explore the SWS fair ratio for ASICS

Result: Price-to-Earnings of 35.4x (OVERVALUED)

However, slowing revenue growth or a shift in market sentiment could quickly challenge the optimism that is currently driving ASICS’s elevated share price.

Find out about the key risks to this ASICS narrative.

Another View: What Does the DCF Model Suggest?

While the price-to-earnings ratio paints ASICS as expensive, the SWS DCF model offers a different perspective. According to our DCF analysis, ASICS shares are currently trading above fair value, which means the stock may be overvalued on this basis as well. Does this reinforce caution or call for a deeper look at growth assumptions?

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 ASICS 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 876 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 ASICS Narrative

If you want to dig deeper or see things from a different angle, you can analyze the numbers and shape your own insights in just a few minutes. Do it your way

A great starting point for your ASICS research is our analysis highlighting 3 key rewards and 1 important warning sign 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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