Suntory Beverage & Food (TSE:2587): Assessing Valuation Following Upgraded Earnings Guidance

Suntory Beverage & Food (TSE:2587) has just revised its consolidated earnings guidance for the fiscal year ending December 2025. The company has outlined new revenue and profit projections that are catching investor attention.

See our latest analysis for Suntory Beverage & Food.

Investors seem to be responding positively to the new earnings outlook, with Suntory Beverage & Food’s share price advancing over 4% this week alone. While its latest guidance has energized short-term momentum, it is worth noting that the one-year total shareholder return remains down 5%. More patient holders are still sitting on healthy three- and five-year gains.

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With Suntory Beverage & Food's stock still below analyst targets and recent gains boosting momentum, the question remains: Is this an opportune entry for value-seeking investors, or has the market already factored in future growth?

Price-to-Earnings of 17x: Is it justified?

Suntory Beverage & Food is trading on a price-to-earnings (P/E) ratio of 17x, which is notably lower than both its industry peers and its own estimated fair ratio. With a recent close of ¥4,863 per share, this multiple suggests the company may be undervalued relative to similar stocks.

The P/E ratio measures how much investors are willing to pay for each yen of earnings and serves as a central yardstick for consumer staples companies like Suntory Beverage & Food. It reflects market sentiment on future earning power and growth prospects.

Compared to the Asian Beverage industry average of 19.6x and the peer group’s 26.8x, Suntory Beverage & Food’s P/E stands out as attractively priced. In addition, the fair price-to-earnings ratio is estimated at 21.4x, indicating clear headroom before valuations reach what the market model suggests is justified. If market expectations catch up, there could be a re-rating opportunity for patient investors.

Explore the SWS fair ratio for Suntory Beverage & Food

Result: Price-to-Earnings of 17x (UNDERVALUED)

However, slower revenue growth or a sudden dip in net income could present challenges for the case for undervaluation in the coming quarters.

Find out about the key risks to this Suntory Beverage & Food narrative.

Another View: What Does the DCF Model Say?

The SWS DCF model takes a different approach by estimating the company's intrinsic value based on its future cash flows. According to this method, Suntory Beverage & Food appears to be significantly undervalued, with the share price trading over 50% below the model's fair value estimate. However, does this highlight a missed opportunity, or has the market already spotted something the models have not?

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 Suntory Beverage & Food 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 874 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 Suntory Beverage & Food Narrative

If you have a different perspective on the numbers or want to form your own conclusions, you can easily build your own view in just a few minutes. Do it your way

A good starting point is our analysis highlighting 4 key rewards investors are optimistic about regarding Suntory Beverage & Food.

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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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