Assessing Mitsubishi Chemical Group Amid Stock Decline and Shifting Industry Sentiment in 2025

If you have Mitsubishi Chemical Group in your sights, you are not alone. Plenty of investors are wrestling with the question of what to do next with this stock. After all, Mitsubishi Chemical Group has taken some dramatic turns over the past few years, handing long-term shareholders a return of nearly 64% over the last five years and almost 39% over three years. Yet, zooming in to the shorter term, things have been a bit rockier, with a decline of about 3.6% over the last year and a drop of 3.9% in the past month alone. Even over the past week, the stock is down 2.7%, suggesting that shifting market conditions are creating a sense of uncertainty or perhaps even opportunity for those willing to dig deeper.

Recently, the broader market narrative around chemicals and materials has been a mixed bag, with periodic optimism about innovation and sustainability balanced by concerns over global demand and shifting supply chains. While there has not been a single headline moving Mitsubishi Chemical Group's stock in a major way, subtle shifts in investor risk appetite seem to be showing up in the price chart.

But is the current dip a red flag or a buying chance? That is where valuation comes in. Mitsubishi Chemical Group currently scores a 3 out of 6 on our valuation checklist, indicating it is undervalued on half of the major measures we track. In the following sections, we will break down these valuation approaches. Stay tuned until the end for a perspective on valuation that might change the way you look at this stock entirely.

Why Mitsubishi Chemical Group is lagging behind its peers

Approach 1: Mitsubishi Chemical Group Discounted Cash Flow (DCF) Analysis

A Discounted Cash Flow (DCF) model estimates a company’s intrinsic value by forecasting its future cash flows and discounting them back to the present using an appropriate rate. This approach provides a way to judge if a stock is currently undervalued relative to its expected ability to generate cash.

For Mitsubishi Chemical Group, the DCF model begins with its latest twelve-month free cash flow of ¥258.5 billion. Analysts have provided cash flow estimates for the next several years, projecting, for instance, ¥672.7 billion in 2026 before moderating over the next decade. By 2030, projected free cash flow is expected to be around ¥112.5 billion. Estimates for years beyond analyst coverage are extrapolated based on historical patterns and company outlook.

Factoring in these projections, the DCF analysis produces an estimated intrinsic value of ¥1,074 per share. With the model suggesting the shares are trading at a 21.4% discount to this value, the implication is clear: the stock appears to be undervalued at current prices.

Result: UNDERVALUED

Head to the Valuation section of our Company Report for more details on how we arrive at this Fair Value for Mitsubishi Chemical Group.

Our Discounted Cash Flow (DCF) analysis suggests Mitsubishi Chemical Group is undervalued by 21.4%. Track this in your watchlist or portfolio, or discover more undervalued stocks.

Approach 2: Mitsubishi Chemical Group Price vs Earnings

The price-to-earnings (PE) ratio is a widely used valuation tool for profitable companies like Mitsubishi Chemical Group, as it directly compares a company’s stock price to its earnings. This makes it a strong indicator of how much investors are willing to pay for each yen of earnings, which works best for established, consistently profitable businesses.

Interpreting the PE ratio always requires context. Higher growth prospects or lower perceived risks typically warrant a higher PE multiple. Lower growth or higher risks justify a lower one. Market sentiment, business quality, and sector-specific factors also play into what is considered “normal” or fair for any given company.

Mitsubishi Chemical Group currently trades at a PE ratio of 31.7x. For context, the company’s industry average PE ratio stands at 12.6x, while similar peers average 32.3x. This shows Mitsubishi Chemical Group’s valuation is broadly in line with its industry peers but notably above the wider sector average.

To offer a more tailored benchmark, Simply Wall St’s “Fair Ratio” is 21.2x for Mitsubishi Chemical Group. The Fair Ratio goes beyond the basic peer or industry comparison by factoring in earnings growth, profit margins, risks, industry characteristics, and the company’s market cap, giving a more precise view of what the valuation should be.

Comparing the company’s current PE ratio (31.7x) to its Fair Ratio (21.2x) suggests the stock is trading above what is justified by its fundamentals and risk profile.

Result: OVERVALUED

PE ratios tell one story, but what if the real opportunity lies elsewhere? Discover companies where insiders are betting big on explosive growth.

Upgrade Your Decision Making: Choose your Mitsubishi Chemical Group Narrative

Earlier we mentioned there is an even better way to understand valuation, so let’s introduce you to Narratives. A Narrative is your own story about a company, your perspective on the business, its strengths, and future, which you connect directly to the numbers by specifying your own estimates for fair value, revenues, earnings, and margins. Narratives bridge the gap between a company’s real-world story and financial forecasts, making your investment thesis clear and actionable.

On Simply Wall St’s Community page, millions of investors can easily create and update their own Narratives for Mitsubishi Chemical Group, making this tool both powerful and accessible. Narratives help you decide whether to buy or sell by comparing your Fair Value calculation to the current market price, and they adjust automatically when new news or earnings reports come in. For example, two investors could have very different Narratives based on the latest analyst expectations. One might be optimistic, using the most bullish price target of ¥1,300, expecting major gains from advanced materials, while another could be cautious, siding with the lowest target of ¥700 due to persistent industry headwinds. In short, Narratives let you turn insight into conviction and conviction into smarter investing decisions.

Do you think there's more to the story for Mitsubishi Chemical Group? Create your own Narrative to let the Community know!

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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