Kewpie (TSE:2809) Valuation in Focus After Upbeat Earnings and Dividend Guidance Update

Kewpie (TSE:2809) just raised its earnings guidance for the fiscal year ending November 2025, largely because the Food Service segment is outpacing expectations as egg prices remain high. The company also increased its year-end dividend forecast.

See our latest analysis for Kewpie.

This upbeat guidance and a dividend bump have kept investor sentiment positive. Kewpie’s 26% year-to-date share price return stands out, with three- and five-year total shareholder returns of 83% and 109% showing genuine long-term wealth creation. Momentum remains strong as the outlook improves.

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With shares near their highs and upbeat guidance already making headlines, the key question is whether Kewpie's stock still offers value or if the market has already priced in the company's further growth prospects.

Price-to-Earnings of 20.5x: Is it justified?

Kewpie's shares are trading at a price-to-earnings (P/E) ratio of 20.5x, placing them well above both the industry and peer group averages. With the last close at ¥4,169, this elevated valuation signals investors are paying a premium relative to sector norms.

The P/E ratio measures how much investors are willing to pay for each yen of current earnings. For food sector companies like Kewpie, it is a widely used benchmark to weigh valuation against earnings power and future growth prospects.

Right now, the market appears to be pricing in stronger growth and profitability than seen in other Japanese food companies, potentially due to Kewpie’s earnings momentum and upgraded guidance. However, the P/E is still higher than both the industry average (16.4x) and the peer average (17.5x), and even above the estimated fair P/E ratio of 18.1x. This could indicate the stock has less room for error as results unfold.

Explore the SWS fair ratio for Kewpie

Result: Price-to-Earnings of 20.5x (OVERVALUED)

However, any unexpected weakness in food service demand or a normalization of egg prices could weigh on profitability and challenge current investor optimism.

Find out about the key risks to this Kewpie narrative.

Another View: SWS DCF Model Suggests Undervaluation

While the current P/E ratio suggests that Kewpie may be expensive compared to its food industry peers, our DCF model offers a different perspective. Based on projected future cash flows, Kewpie's shares are trading about 21% below their fair value estimate, indicating potential undervaluation. Which perspective will ultimately prove right?

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 Kewpie 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 Kewpie Narrative

Kewpie’s story is ultimately yours to shape. If you want to analyse the numbers or interpret the trends differently, you can easily create your own perspective in under three minutes, all with Do it your way.

A great starting point for your Kewpie research is our analysis highlighting 3 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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