ASICS (TSE:7936) Valuation in Focus After Upgraded Outlook, Buyback, and Dividend Boost

On November 12, ASICS (TSE:7936) unveiled a series of shareholder-focused moves, including a raised earnings outlook, a new share buyback program, and a planned boost to its annual dividend. These steps highlight the company’s confidence in future growth and its commitment to rewarding shareholders.

See our latest analysis for ASICS.

ASICS has attracted fresh attention after revising its full-year earnings forecast upward, announcing a sizable buyback, and rolling out a dividend hike. While momentum has cooled a bit lately, with a 30-day share price return of -6.4%, the stock has climbed 22.4% year-to-date and delivered an impressive 31.7% total shareholder return over the past twelve months. This underscores strong long-term performance that keeps investors engaged despite recent volatility.

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With ASICS increasing dividends, boosting buybacks, and raising its outlook, the question for investors is whether the current share price leaves room for upside or if future growth is already built in.

Price-to-Earnings of 31.5x: Is it justified?

ASICS is currently priced at a lofty 31.5 times its earnings, standing well above both its closest peers and the broader Japanese Luxury industry. At a last close of ¥3,744, its valuation suggests the market is pricing in ambitious growth expectations.

The price-to-earnings (P/E) ratio measures how much investors are willing to pay for each yen of ASICS' earnings. For consumer brands, especially those with proven growth, a high P/E can signal anticipated outperformance, but it also raises the bar for future results. In ASICS’ case, this multiple reflects a market mindset that expects significant profit expansion in coming years.

Compared to the JP Luxury industry average of 14.5x, ASICS’ 31.5x P/E is considered a premium. The company also trades above its own estimated fair P/E ratio of 23.1x. Such a gap means the share price has moved ahead of underlying profit trends and may eventually revert if earnings or sentiment fall short.

Explore the SWS fair ratio for ASICS

Result: Price-to-Earnings of 31.5x (OVERVALUED)

However, any slowdown in earnings or weaker-than-expected revenue growth could temper investor enthusiasm and challenge the current premium valuation.

Find out about the key risks to this ASICS narrative.

Another View: Our DCF Model Puts The Price Above Fair Value

While the market’s P/E multiple shows a hefty premium, our SWS DCF model points to a fair value of ¥3,309 per share. This is well below ASICS' last close and suggests the current price may be ahead of future cash flows. Does this challenge the growth optimism built into today's valuation?

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 921 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 have a different perspective or want to investigate the numbers for yourself, it only takes a few minutes to build your own view, and Do it your way.

A good starting point is our analysis highlighting 3 key rewards investors are optimistic about regarding ASICS.

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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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