Mizuho Leasing (TSE:8425): Assessing Valuation Following Strategic Alliance With TRE Holdings

Mizuho Leasing Company (TSE:8425) has entered into a strategic capital and business alliance with TRE Holdings. The company is acquiring additional shares to deepen collaboration and unlock new business opportunities for both firms.

See our latest analysis for Mizuho Leasing Company.

This strategic move has caught investor attention, contributing to a noticeable momentum shift in Mizuho Leasing Company's shares. After a strong 13.17% share price return over the past three months and an impressive 32.04% total shareholder return in the last year, it is clear that sentiment is building around the company's long-term prospects.

If you’re curious about what other companies are showing strong momentum and insider conviction lately, it is a great moment to discover fast growing stocks with high insider ownership

With shares having rallied strongly in recent months, the key question now is whether Mizuho Leasing remains undervalued by the market or if investors have already priced in the anticipated benefits of its latest alliance. Could there still be a buying opportunity, or is future growth already reflected in the share price?

Price-to-Earnings of 7.4x: Is it justified?

Mizuho Leasing Company is trading at a price-to-earnings (P/E) ratio of 7.4x, notably below both peer and broader industry averages. With a last close price of ¥1,263, the stock’s multiple suggests it is priced for value despite recent share price gains.

The P/E ratio compares a company’s current share price to its per-share earnings and is a commonly used gauge for valuing businesses, especially in the financial sector. A low P/E can signal that the market is underestimating a company’s profit potential or future growth prospects.

In Mizuho Leasing’s case, its P/E ratio of 7.4x stands out against the peer average of 10.8x and an even higher JP Diversified Financial industry average of 12.4x. This sharp discount implies the market expects slower growth, or it could be undervaluing the company’s recent momentum in earnings growth and strategic moves. If the fair ratio were to close the gap, there may be considerable room for the multiple and the stock price to catch up to peers.

See what the numbers say about this price — find out in our valuation breakdown.

Result: Price-to-Earnings of 7.4x (UNDERVALUED)

However, risk remains if industry conditions soften or if the strategic alliance does not deliver the expected operational and financial synergies.

Find out about the key risks to this Mizuho Leasing Company narrative.

Another View: Discounted Cash Flow Model

Looking beyond earnings multiples, our DCF model offers a different perspective for Mizuho Leasing. According to this approach, the stock is trading around 44.9% below our estimate of its fair value, which suggests there may be significant upside. Does this indicate the market is not fully recognizing the company’s true potential?

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 Mizuho Leasing Company 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 Mizuho Leasing Company Narrative

If you see things differently or want to dive deeper, you can quickly develop your own view using the available data and insights. Do it your way

A great starting point for your Mizuho Leasing Company research is our analysis highlighting 2 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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