Assessing Inpex (TSE:1605) Valuation as Buyback Strategy Highlights Shareholder Value Focus

Inpex (TSE:1605) has just acquired over 7 million of its own shares in the market as part of a larger buyback initiative aiming for 50 million shares by year-end 2025. This move signals a strategic focus on capital management and returning value to shareholders.

See our latest analysis for Inpex.

Momentum has been building for Inpex lately, with a 48% share price return year-to-date and a one-year total shareholder return of nearly 53%, which has added to investor confidence around the buyback news. The remarkable five-year total return of over 549% highlights the staying power the company has delivered. Recent gains suggest the market’s appetite for energy sector opportunities remains strong.

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With the share price already up sharply and a sizable stock buyback underway, the key question is whether Inpex remains undervalued or if the market has already priced in its future growth prospects. Is there still a buying opportunity for investors?

Most Popular Narrative: 16% Overvalued

With Inpex's last close at ¥2,967 and the most widely followed narrative estimating fair value at ¥2,548, the outlook points to a notable premium versus what analysts project. The numbers suggest investors are now paying up compared to consensus fundamental expectations, setting the stage for deeper debate.

The current valuation appears to assume that INPEX's large-scale LNG and upstream expansion projects (notably Ichthys expansion and Abadi FID) will execute on time and on budget, unlocking substantial future earnings and cash flows, despite industry risks of execution delays, cost overruns, and commodity price volatility that could significantly compress net margins if not managed well.

Read the complete narrative.

What ambitious growth projections and margin targets are locked inside this narrative? The formula behind this fair value hinges on confidence in smooth LNG expansion and future cash generation. See which bold, forward-looking assumptions power this above-market price—one number in particular could surprise you.

Result: Fair Value of ¥2,548 (OVERVALUED)

Have a read of the narrative in full and understand what's behind the forecasts.

However, sustained global LNG demand or successful low-carbon initiatives could challenge consensus assumptions and change the outlook for Inpex's valuation.

Find out about the key risks to this Inpex narrative.

Another View: What Does the SWS DCF Model Indicate?

While analyst narratives suggest Inpex is trading well above fair value, our DCF model tells a different story. According to this approach, Inpex shares appear to be undervalued by a wide margin relative to their estimated intrinsic value, which significantly challenges prevailing market caution. Could this mean there is hidden upside that consensus is missing?

Look into how the SWS DCF model arrives at its fair value.

Build Your Own Inpex Narrative

If you see things differently or want to dig deeper into the numbers yourself, you can craft your own story in just a few minutes. Do it your way.

A great starting point for your Inpex research is our analysis highlighting 4 key rewards and 1 important warning sign 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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