3 Japanese Stocks Estimated To Be Up To 49.3% Below Intrinsic Value

Japan’s stock markets have shown modest gains recently, with the Nikkei 225 Index rising 0.8% and the broader TOPIX Index up 0.2%. Amid speculation about the Bank of Japan's interest rate policies and a strengthening yen, investors are closely watching for undervalued opportunities in this evolving market landscape. Identifying stocks that are trading below their intrinsic value can be particularly rewarding in such conditions, as these investments may offer significant upside potential when market sentiments stabilize.

Top 10 Undervalued Stocks Based On Cash Flows In Japan

Name	Current Price	Fair Value (Est)	Discount (Est)
Syuppin (TSE:3179)	¥1326.00	¥2650.53	50%
Funai Soken Holdings (TSE:9757)	¥2323.00	¥4634.37	49.9%
Hagiwara Electric Holdings (TSE:7467)	¥3505.00	¥6719.28	47.8%
Hottolink (TSE:3680)	¥341.00	¥660.44	48.4%
BayCurrent Consulting (TSE:6532)	¥4367.00	¥8584.65	49.1%
Ohara (TSE:5218)	¥1354.00	¥2581.13	47.5%
Visional (TSE:4194)	¥8820.00	¥17120.83	48.5%
TORIDOLL Holdings (TSE:3397)	¥3700.00	¥7049.92	47.5%
SBI ARUHI (TSE:7198)	¥855.00	¥1703.23	49.8%
freee K.K (TSE:4478)	¥3000.00	¥5914.78	49.3%

Click here to see the full list of 80 stocks from our Undervalued Japanese Stocks Based On Cash Flows screener.

Let's dive into some prime choices out of the screener.

freee K.K (TSE:4478)

Overview: freee K.K. provides cloud-based accounting and HR software solutions in Japan, with a market capitalization of ¥175.67 billion.

Operations: The company generates revenue of ¥25.43 billion from its platform business segment.

Estimated Discount To Fair Value: 49.3%

freee K.K. is trading at ¥3000, significantly below its estimated fair value of ¥5914.78, indicating it may be undervalued based on discounted cash flows. The company expects net sales of ¥33.06 billion for the fiscal year ending June 30, 2025, and forecasts annual profit growth above market averages over the next three years. However, its return on equity is projected to be relatively low at 18.7%. Recent amendments to its articles of incorporation suggest plans for business expansion.

• Insights from our recent growth report point to a promising forecast for freee K.K's business outlook.
• Take a closer look at freee K.K's balance sheet health here in our report.

SaizeriyaLtd (TSE:7581)

Overview: Saizeriya Co., Ltd. operates restaurants in Japan, Australia, and Asia with a market cap of ¥246.26 billion.

Operations: The company generates revenue from its restaurant operations in Japan, Australia, and Asia.

Estimated Discount To Fair Value: 33.3%

Saizeriya Ltd. is trading at ¥5020, considerably below its estimated fair value of ¥7524.08, highlighting potential undervaluation based on cash flows. Earnings are forecast to grow 26.15% annually, outpacing the JP market's 8.5%. Despite a significant earnings increase of 341% over the past year, revenue growth is expected to be moderate at 7.1% per year and return on equity is projected to remain low at 11.6%.

• Our earnings growth report unveils the potential for significant increases in SaizeriyaLtd's future results.
• Delve into the full analysis health report here for a deeper understanding of SaizeriyaLtd.

KATITAS (TSE:8919)

Overview: KATITAS CO., Ltd. surveys, purchases, refurbishes, remodels, and sells used homes to individuals and families in Japan with a market cap of ¥146.37 billion.

Operations: The company's revenue primarily comes from its House for Resale Reproduction Business, which generated ¥126.30 billion.

Estimated Discount To Fair Value: 40.8%

KATITAS is trading at ¥1873, significantly below its estimated fair value of ¥3161.42, indicating undervaluation based on cash flows. Earnings grew 43.2% last year and are forecast to increase by 9.81% annually, surpassing the JP market's 8.5%. Revenue is expected to grow at 7.4% per year, also outpacing the market's 4.3%. Despite an unstable dividend track record, KATITAS shows strong potential with a high forecasted return on equity of 21.3%.

• In light of our recent growth report, it seems possible that KATITAS' financial performance will exceed current levels.
• Unlock comprehensive insights into our analysis of KATITAS stock in this financial health report.

Taking Advantage

• Access the full spectrum of 80 Undervalued Japanese Stocks Based On Cash Flows by clicking on this link.
• Got skin in the game with these stocks? Elevate how you manage them by using Simply Wall St's portfolio, where intuitive tools await to help optimize your investment outcomes.
• Unlock the power of informed investing with Simply Wall St, your free guide to navigating stock markets worldwide.

Contemplating Other Strategies?

• Explore high-performing small cap companies that haven't yet garnered significant analyst attention.
• Diversify your portfolio with solid dividend payers offering reliable income streams to weather potential market turbulence.
• Fuel your portfolio with companies showing strong growth potential, backed by optimistic outlooks both from analysts and management.

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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