Is Now An Opportune Moment To Examine ZOZO, Inc. (TSE:3092)?

While ZOZO, Inc. (TSE:3092) might not have the largest market cap around , it saw a double-digit share price rise of over 10% in the past couple of months on the TSE. Shareholders may appreciate the recent price jump, but the company still has a way to go before reaching its yearly highs again. With many analysts covering the mid-cap stock, we may expect any price-sensitive announcements have already been factored into the stock’s share price. However, could the stock still be trading at a relatively cheap price? Let’s examine ZOZO’s valuation and outlook in more detail to determine if there’s still a bargain opportunity.

View our latest analysis for ZOZO

Is ZOZO Still Cheap?

The stock seems fairly valued at the moment according to our valuation model. It’s trading around 17.69% above our intrinsic value, which means if you buy ZOZO today, you’d be paying a relatively fair price for it. And if you believe the company’s true value is ¥3115.84, then there isn’t really any room for the share price grow beyond what it’s currently trading. What's more, ZOZO’s share price may be more stable over time (relative to the market), as indicated by its low beta.

What does the future of ZOZO look like?

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. ZOZO's earnings over the next few years are expected to increase by 23%, indicating a highly optimistic future ahead. This should lead to more robust cash flows, feeding into a higher share value.

What This Means For You

Are you a shareholder? It seems like the market has already priced in 3092’s positive outlook, with shares trading around its fair value. 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 the stock? Will you have enough conviction to buy should the price fluctuates below the true value?

Are you a potential investor? If you’ve been keeping an eye on 3092, now may not be the most optimal time to buy, given it is trading around its fair value. However, the positive outlook is encouraging for the company, which means it’s worth further examining other factors such as the strength of its balance sheet, in order to take advantage of the next price drop.

So if you'd like to dive deeper into this stock, it's crucial to consider any risks it's facing. You'd be interested to know, that we found 1 warning sign for ZOZO and you'll want to know about it.

If you are no longer interested in ZOZO, 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.