ASICS (TSE:7936) Valuation: Is Premium Pricing Justified After Recent Share Price Pause?

ASICS (TSE:7936) shares experienced subtle movement today, trading slightly lower following a recent run-up this quarter. Investors are watching closely to see if the stock’s momentum can continue after a strong year so far.

See our latest analysis for ASICS.

ASICS has caught plenty of attention this year, with a strong share price run and a 1-year total shareholder return of 36.2% highlighting a clear uptick in momentum. Recent price moves, including the dip today, seem more like a pause rather than a reversal, as confidence in the company’s long-term outlook continues to build.

If you’re keeping an eye on stocks with fresh momentum and strong insider support, it is a great moment to widen your search and discover fast growing stocks with high insider ownership

Yet with the shares up nearly 29% year-to-date, investors are left asking the key question: is everything already baked into the price, or is there more value to unlock in ASICS at these levels?

Price-to-Earnings of 37.6x: Is it justified?

ASICS currently trades at a price-to-earnings (P/E) ratio of 37.6x. This reflects high market expectations compared to both the industry and its peers.

The P/E ratio measures how much investors are willing to pay for a yen of company earnings. For ASICS, a 37.6x multiple suggests that the market is pricing in significant future profit growth and continued outperformance in the premium athletic and luxury segment.

This premium is difficult to overlook. The average P/E for the Japanese Luxury industry is just 13.2x, and peer companies trade at an average of 14.1x. Even when benchmarked against an estimated fair P/E of 23x for ASICS, the current valuation remains steep. This implies the market could adjust if future growth does not deliver at exceptional levels.

Explore the SWS fair ratio for ASICS

Result: Price-to-Earnings of 37.6x (OVERVALUED)

However, risks such as weaker-than-expected profit growth or a slowdown in premium segment demand could quickly challenge investor optimism going forward.

Find out about the key risks to this ASICS narrative.

Another View: Discounted Cash Flow Assessment

Looking at ASICS from the perspective of our SWS DCF model adds a new dimension. The model suggests ASICS shares are currently trading about 20% above estimated fair value. This stands in contrast with the optimism seen in multiples. Could the market be overestimating future cash flows?

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 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 a fresh perspective or are keen to back your own convictions with data, crafting your own view of ASICS is quick and straightforward. Do it your way.

A great starting point for your ASICS research is our analysis highlighting 2 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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