Credit Saison (TSE:8253): Assessing Valuation After Completing 3.45% Share Buyback

Credit Saison (TSE:8253) has wrapped up its latest buyback, acquiring just over 5 million shares or 3.45% of its outstanding stock since May. This move often signals management's confidence in the company's underlying value.

See our latest analysis for Credit Saison.

With the buyback now wrapped up, investor sentiment around Credit Saison has been stable, but the market has not shown dramatic shifts. Over the past year, the company’s total shareholder return was a modest 0.11%, reflecting steady long-term performance even as short-term price momentum remains muted. This serves as a reminder that confidence-building moves like buybacks take time to translate into meaningful gains for shareholders.

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With steady returns and a solid buyback completed, the question for investors now is clear: is Credit Saison undervalued with room to run, or has its growth potential already been fully factored in by the market?

Price-to-Earnings of 8.5x: Is it justified?

Credit Saison is trading at a price-to-earnings (P/E) ratio of 8.5x, which is much lower than its peers and industry averages. This signals potential undervaluation given the last close price of ¥3,878 and its current earnings profile.

The price-to-earnings ratio measures how much investors are willing to pay for each unit of net income generated by the company. In the financial sector, this metric often serves as a quick check on whether a stock is priced below or above its perceived future profitability.

The market appears to be underpricing Credit Saison’s earnings power, especially when comparing its P/E of 8.5x to both the peer average of 15.3x and the Asian Consumer Finance industry average of 15.8x. In addition, analysis indicates the fair price-to-earnings ratio should be 16.8x. This level is considerably higher than the current valuation and one the market could move toward if sentiment changes.

Explore the SWS fair ratio for Credit Saison

Result: Price-to-Earnings of 8.5x (UNDERVALUED)

However, risk remains from modest revenue growth and uneven short-term returns. These factors could limit how quickly any undervaluation closes in the near term.

Find out about the key risks to this Credit Saison narrative.

Another View: What Does the SWS DCF Model Say?

Taking a different angle, the SWS DCF model values Credit Saison significantly higher than where it trades today. According to this method, the shares are changing hands at less than half their estimated fair value. However, does this model capture market realities, or is it too optimistic?

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 Credit Saison 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 Credit Saison Narrative

If you’re keen to reach your own conclusions or want to challenge the story above, you can build and publish your own view of Credit Saison’s outlook. This process often takes just a few minutes. Do it your way

A great starting point for your Credit Saison research is our analysis highlighting 3 key rewards and 2 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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