Artience (TSE:4634) Valuation in Focus Following Completion of Share Buyback Program

Artience (TSE:4634) has completed the repurchase of over 3% of its outstanding shares as part of its buyback program announced earlier this year. This move highlights management’s confidence in the company’s long-term value.

See our latest analysis for artience.

Alongside this completed buyback, artience’s share price has gradually regained momentum after a quiet spell and is now trading at ¥3,175. While the 1-year total shareholder return stands at -14.8%, long-term holders have been well rewarded with a 96% five-year total return. The recent uptick could signal the start of renewed interest from investors.

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But is the recent optimism warranted, or have shares already run up to reflect any future growth? With valuation metrics suggesting room for upside, investors must decide if artience is genuinely undervalued or if all the good news is already priced in.

Price-to-Earnings of 10.5x: Is it justified?

artience currently trades at a price-to-earnings (P/E) ratio of just 10.5x, below both its industry peers and recent market averages. At the last close of ¥3,175, this multiple hints at a discount versus comparable stocks in the Japanese Chemicals sector.

The price-to-earnings ratio measures how much investors are willing to pay for each yen of current earnings. It is a widely used metric for assessing relative value. For a company like artience, consistent profitability makes the P/E ratio particularly telling, especially following its recent buyback and earnings history.

Peer companies in the chemicals industry average a higher ratio, and the industry itself is at 12.9x. This means artience appears attractively priced. Even when compared to its estimated fair P/E ratio of 13.3x, the market is demanding less for access to its earnings. This gap suggests room for market sentiment to shift, which could drive the P/E higher if company fundamentals remain solid.

Explore the SWS fair ratio for artience

Result: Price-to-Earnings of 10.5x (UNDERVALUED)

However, slower revenue growth or disappointing earnings trends could challenge the current optimism and weigh on artience’s near-term share price performance.

Find out about the key risks to this artience narrative.

Another View: SWS DCF Model Suggests Further Upside

Looking from a different angle, our DCF model estimates artience’s fair value at ¥6,997.74, which is far above the current market price of ¥3,175. This suggests a discount of nearly 55%. While the P/E ratio points to value, it raises the question of whether the DCF makes the stock an even bigger bargain or if there are risks the market sees that the model does 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 artience 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 artience Narrative

If you have your own perspective, or prefer to dig deeper on your terms, you can create your own narrative 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 artience.

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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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