A Fresh Look at Nippon TV (TSE:9404) Valuation After Share Buyback Announcement

Nippon Television Holdings (TSE:9404) just revealed a share buyback plan, aiming to repurchase up to 3.3 million shares. This move highlights management’s confidence in their strategy and their commitment to boosting shareholder value.

See our latest analysis for Nippon Television Holdings.

The buyback announcement has come during a strong run for Nippon Television Holdings, with the share price climbing more than 45% so far this year. Momentum is certainly building, and the company’s impressive 73% total shareholder return over the past year highlights how both price growth and dividends have rewarded investors who stayed invested for the long term.

If you’re curious about where else similar momentum might be found, now is a perfect moment to explore fast growing stocks with high insider ownership.

Yet with shares rallying so strongly and management doubling down with a buyback, investors are left to wonder if Nippon Television Holdings is truly trading below its intrinsic value, or if future growth is already fully reflected in the stock price.

Price-to-Earnings of 17.3x: Is it justified?

Nippon Television Holdings trades at a price-to-earnings (P/E) ratio of 17.3x, which makes its stock more expensive than both its industry peers and the broader market. The last close price was ¥3,901, sending a strong signal that investors are willing to pay a premium for the company’s earnings.

The P/E ratio compares the company's share price to its per-share earnings, giving investors a sense of how much they are paying for each yen of profit. In the media industry, a higher P/E can indicate growth expectations or perceived stability, but it can also point to an overvalued stock if performance does not justify it.

Compared to the JP Media industry average of 16.7x, Nippon Television Holdings is valued at a noticeably higher multiple. When compared with its peer group’s average P/E of 15.6x, the gap is even wider. However, when measured against the estimated fair price-to-earnings ratio of 26x, the company falls into a more attractive territory. This suggests the market could re-rate the stock upward if assumptions play out.

Explore the SWS fair ratio for Nippon Television Holdings

Result: Price-to-Earnings of 17.3x (OVERVALUED)

However, shifting market dynamics or slower than expected earnings growth could challenge the optimism surrounding Nippon Television Holdings and impact future returns.

Find out about the key risks to this Nippon Television Holdings narrative.

Another View: What Does the DCF Model Say?

While Nippon Television Holdings appears pricey on earnings multiples, our DCF model offers a different perspective. According to this approach, the shares are actually trading about 19% below their estimated fair value. Could the market be missing this opportunity, or is there something the multiples are capturing that the DCF model is 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 Nippon Television Holdings 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 882 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 Nippon Television Holdings Narrative

If you want to dive deeper or challenge the conclusions here, you can dig into the data and shape 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 Nippon Television Holdings.

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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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