Daiwa House Industry (TSE:1925): Revisiting Valuation After Earnings Upgrade and Major U.S. Land Sale

Daiwa House Industry (TSE:1925) announced a raised full-year earnings and dividend outlook for fiscal 2026, indicating stronger-than-anticipated results. This follows a major U.S. land sale and solid progress in real estate sales.

See our latest analysis for Daiwa House Industry.

Daiwa House Industry's recent profit upgrade, powered by a major U.S. land sale and stronger real estate sales, comes as the stock continues its solid performance. Although short-term share price returns have slowed, the main focus is a 12-month total shareholder return close to 15% and an 80% gain over three years, demonstrating long-term momentum and resilient earnings growth.

If you’re curious about sustained growth stories and want to uncover what insiders are backing, now’s an ideal time to explore fast growing stocks with high insider ownership

But after these upgrades and a strong multi-year run, the central question is whether Daiwa House Industry’s shares still offer value. Investors may be wondering if continued growth is already reflected in the current price, leaving little room for buyers.

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

Daiwa House Industry currently trades at a price-to-earnings (P/E) ratio of 10.5, which suggests shares are attractively valued compared to its sector and peers. With the last close at ¥5,214, the stock reflects compelling relative value in the context of ongoing growth.

The P/E ratio measures how much investors are willing to pay per yen of earnings. In real estate, this multiple often reflects market expectations for steady income and growth, as opposed to more volatile sectors. A lower P/E can signal that the market is cautious, but in this case it also highlights a potential disconnect between price and earnings power.

Compared to the peer average of 15.6x and the broader Japan real estate industry average of 11.3x, Daiwa House Industry’s ratio stands out as favorable. Notably, our estimate of a fair P/E ratio for the company is even higher at 19.7x. This points to a valuation level the market could eventually recognize if performance is sustained.

Explore the SWS fair ratio for Daiwa House Industry

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

However, slowing short-term returns and a potential cooldown in real estate sales growth could present challenges to Daiwa House Industry's current momentum.

Find out about the key risks to this Daiwa House Industry narrative.

Another View: Discounted Cash Flow Perspective

Taking a different approach, our DCF model estimates Daiwa House Industry’s fair value at ¥5,536, which is approximately 5.8% above the current price of ¥5,214. This indicates the stock may be undervalued even after its recent increase. However, it remains to be seen whether the market will recognize this gap or if it signals caution for future returns.

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 Daiwa House Industry 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 895 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 Daiwa House Industry Narrative

If you prefer to follow your own line of inquiry or want to challenge our findings, crafting a custom narrative takes just a few minutes. Do it your way

A great starting point for your Daiwa House Industry research is our analysis highlighting 4 key rewards and 2 important warning signs that could impact your investment decision.

Looking for more investment ideas?

Give yourself the best shot at outperformance. Handpick your next opportunity with screeners designed to highlight stocks with strong upside, overlooked value, and tomorrow’s momentum leaders.

• Spot rising potential by reviewing these 3580 penny stocks with strong financials showing impressive growth and strong financial resilience.
• Get ahead of technological shifts as you scan these 27 AI penny stocks that are pushing boundaries in artificial intelligence innovation.
• Uncover value before it hits the radar by checking these 895 undervalued stocks based on cash flows with notable discounts based on underlying cash flows.

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.

Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team@simplywallst.com