Unicharm (TSE:8113): Assessing Valuation After 9-Month Profit Rises Despite Falling Sales

Unicharm (TSE:8113) just released its financial results for the first nine months of 2025, reporting a 4% decline in sales and lower core operating income. The company still managed a modest rise in profit to shareholders.

See our latest analysis for Unicharm.

Unicharm’s share price has staged a modest rebound over the past week, rising nearly 5 percent, following its latest earnings update. However, the picture remains tough for long-term shareholders. The one-year total shareholder return of minus 35 percent reflects broader headwinds and a recovery story that is still in early days.

If you’re weighing new opportunities amid Unicharm’s turnaround, this could be the moment to broaden your scope and discover fast growing stocks with high insider ownership

With shares still trading well below their analyst price targets and a significant intrinsic discount, is this a rare window to buy into a recovery? Or do current valuations already anticipate a turnaround?

Price-to-Earnings of 21x: Is it justified?

Unicharm shares closed at ¥1001, trading at a price-to-earnings (P/E) ratio of 21x. This suggests investors are paying a premium compared to its industry and peers.

The price-to-earnings ratio reveals how much investors are willing to pay for a unit of recent profits. For household products companies like Unicharm, it reflects both current profitability and expectations of future growth in a highly competitive sector.

At 21x, Unicharm's P/E is notably higher than the industry average of 20.3x and the peer group at 17.4x. However, compared to its estimated fair P/E ratio of 27.1x, there could be future potential for multiple expansion if the company's earnings growth picks up. This gap signals that the market might eventually reassess the stock's earnings profile as fundamentals stabilize.

Explore the SWS fair ratio for Unicharm

Result: Price-to-Earnings of 21x (OVERVALUED)

However, sluggish long-term returns and recent underperformance highlight the risk that Unicharm’s turnaround may take longer than investors expect.

Find out about the key risks to this Unicharm narrative.

Another View: What Does the SWS DCF Model Show?

While the market currently sees Unicharm as expensive relative to peers, our DCF model tells a different story. Based on SWS calculations, Unicharm’s shares are trading about 47% below their estimated fair value, which suggests significant undervaluation by this method. Does this signal a long-term opportunity, or does the market know something our model misses?

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 Unicharm 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 870 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 Unicharm Narrative

If our take doesn’t quite fit your outlook or you’d rather dig into the details yourself, you can easily craft your own perspective in just a few minutes. Do it your way

A good starting point is our analysis highlighting 3 key rewards investors are optimistic about regarding Unicharm.

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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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