Is Now An Opportune Moment To Examine Sumitomo Realty & Development Co., Ltd. (TSE:8830)?

Sumitomo Realty & Development Co., Ltd. (TSE:8830) received a lot of attention from a substantial price movement on the TSE over the last few months, increasing to JP¥5,936 at one point, and dropping to the lows of JP¥4,607. Some share price movements can give investors a better opportunity to enter into the stock, and potentially buy at a lower price. A question to answer is whether Sumitomo Realty & Development's current trading price of JP¥4,896 reflective of the actual value of the large-cap? Or is it currently undervalued, providing us with the opportunity to buy? Let’s take a look at Sumitomo Realty & Development’s outlook and value based on the most recent financial data to see if there are any catalysts for a price change.

See our latest analysis for Sumitomo Realty & Development

Is Sumitomo Realty & Development Still Cheap?

According to our price multiple model, which makes a comparison between the company's price-to-earnings ratio and the industry average, the stock price seems to be justfied. 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 13.1x is currently trading slightly above its industry peers’ ratio of 12.75x, which means if you buy Sumitomo Realty & Development today, you’d be paying a relatively reasonable price for it. And if you believe that Sumitomo Realty & Development should be trading at this level in the long run, then there should only be a fairly immaterial downside vs other industry peers. Furthermore, Sumitomo Realty & Development’s share price also seems relatively stable compared to the rest of the market, as indicated by its low beta. This may mean it is less likely for the stock to fall lower from natural market volatility, which suggests less opportunities to buy moving forward.

What kind of growth will Sumitomo Realty & Development generate?

Future outlook is an important aspect when you’re looking at buying a stock, especially if you are an investor looking for growth in your portfolio. 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. Sumitomo Realty & Development's earnings growth are expected to be in the teens in the upcoming years, indicating a solid future ahead. This should lead to robust cash flows, feeding into a higher share value.

What This Means For You

Are you a shareholder? 8830’s optimistic future growth appears to have been factored into the current share price, with shares trading around industry price multiples. However, there are also other important factors which we haven’t considered today, such as the track record of its management team. Have these factors changed since the last time you looked at 8830? Will you have enough conviction to buy should the price fluctuate below the industry PE ratio?

Are you a potential investor? If you’ve been keeping tabs on 8830, now may not be the most optimal time to buy, given it is trading around industry price multiples. However, the optimistic forecast is encouraging for 8830, which means it’s worth diving deeper into other factors such as the strength of its balance sheet, in order to take advantage of the next price drop.

If you'd like to know more about Sumitomo Realty & Development as a business, it's important to be aware of any risks it's facing. For example, we've discovered 1 warning sign that you should run your eye over to get a better picture of Sumitomo Realty & Development.

If you are no longer interested in Sumitomo Realty & Development, 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.

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