Monogatari (TSE:3097): Fresh Sales Growth Fuels Investor Focus on Valuation

Monogatari (TSE:3097) just shared its October 2025 sales update, reporting that net sales for all restaurants, including new locations, reached 108% compared to the same month last year. This fresh data is already sparking new analysis among investors.

See our latest analysis for Monogatari.

After the October sales update, Monogatari’s share price has gained momentum, notching a 1-day return of 3.61% and climbing 9.7% over the past month. The stock’s 25.7% share price return so far this year and impressive 82.7% total shareholder return over three years suggest steadily building investor confidence, despite occasional volatility.

If strong recent growth has you wondering what else is out there, this is a prime time to discover fast growing stocks with high insider ownership

With Monogatari’s shares riding a hot streak and sales growth remaining robust, the key question is whether the current valuation underestimates future upside or if investors have already priced in all the good news.

Price-to-Earnings of 24.6x: Is it justified?

Monogatari currently trades at a price-to-earnings (P/E) ratio of 24.6x, which is higher than both the industry average and its estimated fair P/E. With a last close of ¥4,310, the company appears expensive when using this metric.

The price-to-earnings ratio reflects how much investors are willing to pay today for a yen of current earnings. For restaurant chains like Monogatari, it tends to capture expectations about profitability, growth trajectory, and market sentiment.

This elevated P/E suggests that investors expect strong future growth from Monogatari. However, given its P/E exceeds the JP Hospitality industry average of 23.2x and is also above the fair price-to-earnings ratio of 24x, the market is demanding a premium that may be difficult to sustain if growth slows.

Compared to peers, Monogatari's P/E is above the sector average and even eclipses what statistical models suggest is a fair value for the company. This signals that some optimism is already baked into the price and the premium could narrow if results disappoint.

Explore the SWS fair ratio for Monogatari

Result: Price-to-Earnings of 24.6x (OVERVALUED)

However, if revenue or earnings growth is slower than expected, investor enthusiasm could quickly cool and put pressure on Monogatari's high valuation.

Find out about the key risks to this Monogatari narrative.

Another View: What Does the DCF Model Say?

Looking at Monogatari through the lens of our DCF model offers a different perspective. The SWS DCF model estimates a fair value of ¥4,240, which is slightly below the current share price of ¥4,310. This suggests the stock could be a bit overvalued by this metric. Is the market overlooking risks, or simply expecting more?

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 Monogatari 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 928 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 Monogatari Narrative

If you’re keen to dig deeper or want to check how the numbers stack up for yourself, it’s easy to craft your own view in minutes. Do it your way

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

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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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