Metaplanet (TSE:3350): Taking a Closer Look at Valuation After Recent Share Price Movements

Metaplanet (TSE:3350) has caught attention for its recent performance, with its stock price showing some movement over the past week and month. Investors might be curious about what is driving these changes and how current trends could shape expectations.

See our latest analysis for Metaplanet.

Looking at the bigger picture, Metaplanet’s 11.9% share price return year-to-date barely hints at its dramatic long-term story. The stock boasts a 102.2% total shareholder return over the past year and has jumped an extraordinary 700% across three years. While the recent pullback may point to shifting sentiment or profit taking, the overall momentum still reflects investors’ growing interest in the company’s future potential.

If the bold swings in Metaplanet's stock have piqued your curiosity, this could be the perfect moment to expand your view and discover fast growing stocks with high insider ownership

With dramatic long-term gains but a recent pullback, the question now is whether Metaplanet’s current price underestimates its ongoing potential or if the market has already factored in all of its future growth prospects. Is there a fresh buying opportunity, or is everything priced in?

Price-to-Earnings of 25x: Is it Justified?

Metaplanet is currently trading at a price-to-earnings (P/E) ratio of 25x, which looks high compared to both industry and peer benchmarks, especially with the last close at ¥400.

The price-to-earnings multiple measures how much investors are willing to pay for each yen of earnings. It is a crucial gauge of sentiment and perceived potential. In the hospitality sector, a P/E ratio reflects both current profitability and what the market expects for future growth or resilience.

At 25x, Metaplanet's multiple is higher than the Japanese Hospitality industry average of 23.9x and notably above the peer average of 16.3x. This premium suggests investors may be banking on substantial future growth or other unique drivers within the company that peers do not possess. However, it is worth noting that the estimated fair P/E ratio for Metaplanet is 62x, indicating the market could still move higher if these upbeat assumptions hold.

Explore the SWS fair ratio for Metaplanet

Result: Price-to-Earnings of 25x (OVERVALUED)

However, disappointing future earnings growth or sudden changes in investor sentiment could quickly undermine the optimism that is currently priced into Metaplanet shares.

Find out about the key risks to this Metaplanet narrative.

Another View: Discounted Cash Flow Analysis

While the price-to-earnings comparison suggests Metaplanet is expensive, our DCF model presents an even starker picture. The SWS DCF model estimates the company’s fair value at just ¥35.91 per share, which is far below today’s ¥400 price. Could the market be seeing something that a cash flow model misses?

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 Metaplanet 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 886 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 Metaplanet Narrative

If you are the kind of investor who favors independent research and wants to draw your own conclusions, you can easily craft a story from the numbers yourself in just a few minutes, so why not Do it your way

A great starting point for your Metaplanet research is our analysis highlighting 2 key rewards and 3 important warning signs 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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