At JP¥14,680, Is Kasumigaseki Capital Co.,Ltd. (TSE:3498) Worth Looking At Closely?

While Kasumigaseki Capital Co.,Ltd. (TSE:3498) might not have the largest market cap around , it received a lot of attention from a substantial price increase on the TSE over the last few months. The recent rally in share prices has nudged the company in the right direction, though it still falls short of its yearly peak. As a stock with high coverage by analysts, you could assume any recent changes in the company’s outlook is already priced into the stock. But what if there is still an opportunity to buy? Today we will analyse the most recent data on Kasumigaseki CapitalLtd’s outlook and valuation to see if the opportunity still exists.

See our latest analysis for Kasumigaseki CapitalLtd

What Is Kasumigaseki CapitalLtd Worth?

Kasumigaseki CapitalLtd appears to be expensive according to our price multiple model, which makes a comparison between the company's price-to-earnings ratio and the industry average. We’ve used the price-to-earnings ratio in this instance because there’s not enough visibility to forecast its cash flows. The stock’s ratio of 34.95x is currently well-above the industry average of 11.63x, meaning that it is trading at a more expensive price relative to its peers. Furthermore, Kasumigaseki CapitalLtd’s share price also seems relatively stable compared to the rest of the market, as indicated by its low beta. If you believe the share price should eventually reach levels around its industry peers, a low beta could suggest it is unlikely to rapidly do so anytime soon, and once it’s there, it may be hard to fall back down into an attractive buying range.

Can we expect growth from Kasumigaseki CapitalLtd?

Investors looking for growth in their portfolio may want to consider the prospects of a company before buying its shares. Although value investors would argue that it’s the intrinsic value relative to the price that matter the most, a more compelling investment thesis would be high growth potential at a cheap price. With profit expected to more than double over the next couple of years, the future seems bright for Kasumigaseki CapitalLtd. It looks like higher cash flow is on the cards for the stock, which should feed into a higher share valuation.

What This Means For You

Are you a shareholder? 3498’s optimistic future growth appears to have been factored into the current share price, with shares trading above industry price multiples. At this current price, shareholders may be asking a different question – should I sell? If you believe 3498 should trade below its current price, selling high and buying it back up again when its price falls towards the industry PE ratio can be profitable. But before you make this decision, take a look at whether its fundamentals have changed.

Are you a potential investor? If you’ve been keeping an eye on 3498 for a while, now may not be the best time to enter into the stock. The price has surpassed its industry peers, which means it is likely that there is no more upside from mispricing. However, the optimistic prospect is encouraging for 3498, which means it’s worth diving deeper into other factors in order to take advantage of the next price drop.

If you want to dive deeper into Kasumigaseki CapitalLtd, you'd also look into what risks it is currently facing. To that end, you should learn about the 3 warning signs we've spotted with Kasumigaseki CapitalLtd (including 2 which don't sit too well with us).

If you are no longer interested in Kasumigaseki CapitalLtd, you can use our free platform to see our list of over 50 other stocks with a high growth potential.

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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.