Suzuken (TSE:9987): Exploring Valuation After Strong Profits and Strategic Gains in Latest Earnings

Suzuken (TSE:9987) just released its latest earnings, showing that while sales came in a touch lower than anticipated, both operating and ordinary profit surpassed expectations due to smart cost management and strategic business decisions.

See our latest analysis for Suzuken.

Suzuken’s recent string of upbeat earnings, coupled with extraordinary gains from the sale of investment securities, has kept sentiment buoyant even as the share price pulled back 3.8% over the last day. Despite some near-term volatility, Suzuken’s year-to-date share price return stands at a solid 21.2%, and its total shareholder return has climbed nearly 62% over the past three years. This points to a strong long-term track record and growing confidence in its future prospects.

If Suzuken’s mix of recent progress and long-term performance has you considering new opportunities, it could be the perfect moment to discover See the full list for free.

With Suzuken shares holding steady despite strong reported profits and a solid long-term track record, investors now face a pivotal question: Is the stock undervalued or is the market already factoring in all future gains?

Price-to-Earnings of 12x: Is it justified?

Suzuken currently trades at a price-to-earnings (P/E) ratio of 12x, which is below both the industry average and the broader Japanese market. At a last close of ¥5,727, this lower multiple points to an attractive relative valuation among its peers.

The price-to-earnings (P/E) ratio measures what investors are willing to pay for each yen of the company's earnings. For Suzuken, this suggests the market may be underestimating its future earnings potential, despite the company’s stable profit and growth track record.

Compared to the JP Healthcare industry P/E average of 14.9x and a fair P/E ratio estimate of 18.9x, Suzuken is trading at a notable discount. This positioning could signal room for upward re-rating if earnings continue to deliver above expectations or if sentiment shifts.

Explore the SWS fair ratio for Suzuken

Result: Price-to-Earnings of 12x (UNDERVALUED)

However, slower revenue and net income growth, or a potential reversal in market sentiment, could challenge Suzuken’s current undervaluation story.

Find out about the key risks to this Suzuken narrative.

Another View: SWS DCF Model Offers a Different Verdict

While Suzuken looks undervalued based on its low price-to-earnings ratio, our SWS DCF model estimates its current share price actually sits above its calculated fair value. This contrast highlights how different valuation approaches can lead to very different conclusions. Which method best reflects reality?

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 Suzuken 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 881 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 Suzuken Narrative

If you have a different perspective on Suzuken's outlook or would rather examine the numbers independently, you can easily assemble your own narrative in just a few minutes. Do it your way

A great starting point for your Suzuken research is our analysis highlighting 4 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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