Assessing ASICS (TSE:7936) Valuation After a Strong Year and Recent Share Price Cooldown

ASICS (TSE:7936) has quietly turned into a long term winner, even if the past 3 months have been choppy. With the share price still well above last year, investors are asking what comes next.

See our latest analysis for ASICS.

After a strong run earlier in the year, ASICS has cooled off with a softer 90 day share price return. However, its roughly 24 percent one year total shareholder return still points to underlying confidence as investors reassess growth and valuation.

If ASICS has piqued your interest, this could be a good moment to broaden your watchlist and explore fast growing stocks with high insider ownership for other potential long term compounders.

With earnings still growing and the share price sitting below analyst targets but above intrinsic estimates, the key question now is whether ASICS remains mispriced value or if the market is already baking in its next growth leg.

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

ASICS last closed at ¥3,738, which equates to a price-to-earnings ratio of 31.5 times, noticeably higher than both peers and the wider luxury industry.

The price-to-earnings multiple compares the current share price with the company’s earnings per share. It effectively shows how much investors are willing to pay for each unit of profit. For a consumer durables and luxury brand like ASICS, this measure is a direct read on how the market prices its current earnings power and future profit expectations.

In ASICS case, investors are paying a premium multiple versus what our fair ratio work suggests would be reasonable. The current 31.5 times earnings stands well above the estimated fair price-to-earnings of 23.5 times. This implies the market is already assigning a rich valuation to ASICS earnings, and there is clear room for the multiple to compress closer to that fair level if sentiment or growth expectations moderate.

Compared with the JP Luxury industry average of 14.7 times earnings and a broader peer average of 14.4 times, ASICS trades at more than double the going rate. This underscores how aggressively its profits are being priced relative to competitors.

Explore the SWS fair ratio for ASICS

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

However, slowing revenue or earnings growth, or a sharper de-rating in high-PE consumer brands, could quickly pressure ASICS's elevated valuation and compress future returns.

Find out about the key risks to this ASICS narrative.

Another View on Value

Our DCF model paints a different picture to the rich 31.5 times earnings multiple, suggesting ASICS is trading above its estimated fair value. In other words, even if profits grow as expected, a lot of that future strength may already be priced in. This raises an important question: where might additional upside come from?

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 907 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 see the story differently or want to dig into the numbers yourself, you can build a bespoke view in minutes: 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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