Stock Analysis

CyberAgent And Two More Stocks On The Japanese Exchange That May Be Priced Below Estimated True Value

July 17, 2024

Amidst a backdrop of fluctuating global markets, Japan's stock exchange has seen some intriguing movements, particularly with the yen's recent strength potentially impacting export-driven sectors. As investors navigate these complex waters, identifying stocks that may be undervalued becomes a crucial strategy for those looking to capitalize on discrepancies between market price and intrinsic value.

Top 10 Undervalued Stocks Based On Cash Flows In Japan

Name	Current Price	Fair Value (Est)	Discount (Est)
Persol HoldingsLtd (TSE:2181)	¥255.90	¥491.48	47.9%
Hibino (TSE:2469)	¥2730.00	¥5209.50	47.6%
Fujibo Holdings (TSE:3104)	¥4790.00	¥9403.13	49.1%
West Holdings (TSE:1407)	¥2224.00	¥4177.67	46.8%
Macromill (TSE:3978)	¥888.00	¥1681.04	47.2%
Yokowo (TSE:6800)	¥2061.00	¥3890.71	47%
DKS (TSE:4461)	¥3715.00	¥7138.15	48%
Japan Pure ChemicalLtd (TSE:4973)	¥3455.00	¥6360.05	45.7%
Atrae (TSE:6194)	¥933.00	¥1717.19	45.7%
freee K.K (TSE:4478)	¥2723.00	¥5232.05	48%

Click here to see the full list of 88 stocks from our Undervalued Japanese Stocks Based On Cash Flows screener.

Let's take a closer look at a couple of our picks from the screened companies.

CyberAgent (TSE:4751)

Overview: CyberAgent, Inc. operates primarily in Japan, focusing on media, internet advertising, gaming, and investment development with a market capitalization of approximately ¥491.35 billion.

Operations: The company generates revenue mainly through its media, internet advertising, and gaming segments.

Estimated Discount To Fair Value: 34.7%

CyberAgent is positioned as an undervalued stock in Japan, trading at ¥970.5, significantly below the estimated fair value of ¥1487.24, reflecting a 34.7% discount. The company's earnings have increased by 23.5% over the past year and are expected to continue growing at a robust rate of 20.41% annually over the next three years, outpacing the Japanese market's average growth. However, its forecasted Return on Equity of 13.7% is relatively low, and recent revenue growth projections (6.5% per year) lag behind more aggressive growth rates seen elsewhere in the sector.

TSE:4751 Discounted Cash Flow as at Jul 2024

Taiyo Yuden (TSE:6976)

Overview: Taiyo Yuden Co., Ltd. is a global developer, manufacturer, and seller of electronic components based in Japan, with operations extending to China, Hong Kong, and other international markets, boasting a market capitalization of approximately ¥637.47 billion.

Operations: The company generates its revenue from the development, manufacturing, and sales of electronic components across Japan, China, Hong Kong, and other global markets.

Estimated Discount To Fair Value: 10.5%

Taiyo Yuden, trading at ¥5115, is valued below its estimated fair value of ¥5714.59, marking it as undervalued based on cash flows. Despite a highly volatile share price recently, its earnings are poised for significant growth at 29.29% annually over the next three years, surpassing Japan's market average. However, challenges include a low net profit margin of 2.6%, down from last year's 7.3%, and a dividend yield of 1.76% that is poorly covered by earnings and free cash flows.

TSE:6976 Discounted Cash Flow as at Jul 2024

Nippon Gas (TSE:8174)

Overview: Nippon Gas Co., Ltd. operates in Japan, focusing on the supply and sale of LP gas and natural gas, with a market capitalization of approximately ¥270.32 billion.

Operations: The company's primary revenue is generated from the sale and distribution of LP gas and natural gas across Japan.

Estimated Discount To Fair Value: 33.8%

Nippon Gas, priced at ¥2424.5, is significantly undervalued with a fair value of ¥3661.03 according to DCF analysis, indicating a potential price increase of 30.6%. The company's earnings are expected to grow by 9.84% annually, outpacing the Japanese market forecast of 9%. Despite its unstable dividend record and modest revenue growth predictions (5.5% per year), recent strategic buybacks suggest active management engagement in enhancing shareholder value, including a significant repurchase plan announced for up to ¥3 billion by end-2024.

TSE:8174 Discounted Cash Flow as at Jul 2024

Turning Ideas Into Actions

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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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