Nippon TV (TSE:9404): How Does Valuation Stack Up After New Buyback and Earnings Guidance?

Nippon Television Holdings (TSE:9404) just announced a new share buyback plan targeting up to 3.3 million shares, with the goal of boosting capital efficiency and shareholder returns. In addition, updated earnings guidance gives investors more transparency for the upcoming fiscal year.

See our latest analysis for Nippon Television Holdings.

After a steady stream of positive news, including the buyback and reaffirmed dividend, Nippon Television Holdings’ shares have surged, with a 42.4% year-to-date share price return and a remarkable 70.1% total shareholder return over the past year. Over a three-year stretch, investors have seen total shareholder returns climb an impressive 280%, a sign that momentum is still firmly on their side.

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Yet with shares up so strongly, it raises the question: is Nippon Television Holdings still trading at a discount to its underlying value, or have investors already priced in the company’s future growth and improvements?

Price-to-Earnings of 16.7x: Is it justified?

Nippon Television Holdings is currently trading at a price-to-earnings (P/E) ratio of 16.7x, which stands out against its recent closing price of ¥3,815 and the valuations of similar companies.

The P/E ratio measures how much investors are willing to pay for each yen of earnings. It serves as a direct gauge of market confidence in a company's growth and profit outlook relative to its peers within the media industry.

At 16.7x earnings, the stock is more expensive than both the Japanese Media industry average (16.1x) and the peer group average (14.3x). This premium signals that investors may be factoring in continued momentum or superior performance into the share price. However, compared to the estimated Fair Price-to-Earnings Ratio of 25.8x, there is still a significant gap that could influence future market moves.

Explore the SWS fair ratio for Nippon Television Holdings

Result: Price-to-Earnings of 16.7x (OVERVALUED)

However, potential headwinds such as slower revenue growth or unexpected profit margin pressure could challenge Nippon Television Holdings’ strong shareholder return momentum.

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

Another View: Discounted Cash Flow Perspective

While the price-to-earnings ratio suggests Nippon Television Holdings is a bit pricey compared to its industry, our DCF model offers a different angle. According to the SWS DCF model, shares are currently trading 19.6% below estimated fair value. This points to potential undervaluation despite recent price gains.

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 896 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 investigate the data yourself or come to your own conclusions, you have the freedom to build a personal narrative 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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