Workman (TSE:7564): Assessing Valuation After Updated FY2026 Earnings and Dividend Guidance

WorkmanLtd (TSE:7564) updated investors with revised earnings and dividend forecasts for the fiscal year ending March 2026. The update has prompted attention as the company outlined fresh revenue and profit expectations along with its upcoming dividend plan.

See our latest analysis for WorkmanLtd.

Following the release of its updated earnings and dividend forecasts, WorkmanLtd’s shares have surged with a 2.5% gain in the past day and a 20.7% one-month share price return. This has pushed year-to-date gains to nearly 60%. Over the past year, the total shareholder return has reached 85%, signaling clear momentum as investors react positively to management’s fresh outlook and the company’s consistent growth story.

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With such impressive gains and management’s confident projections now public, the key question becomes whether WorkmanLtd remains attractively valued, or if the market has already factored in all the anticipated growth, leaving little room for upside?

Price-to-Earnings of 30.4x: Is it justified?

WorkmanLtd's shares currently trade at a price-to-earnings ratio (P/E) of 30.4 times, significantly above both peer and industry averages. This raises questions about what is driving this premium relative to the last close of ¥6,930.

The price-to-earnings ratio measures how much investors are willing to pay for each yen of earnings the company generates. For a specialty retailer like WorkmanLtd, it serves as a snapshot of the market’s expectations for future profits and growth potential.

With the company's P/E ratio sitting well above the peer average of 21.9x and the industry average of 13.6x, investors are clearly assigning a growth premium. This could be due to recent profit acceleration and strong momentum. However, the fair P/E based on comparable analysis is calculated at 19.5x, suggesting the current market price could be running ahead of fundamentals and there may be mean reversion pressure if expectations shift.

Explore the SWS fair ratio for WorkmanLtd

Result: Price-to-Earnings of 30.4x (OVERVALUED)

However, there are clear risks, such as potential earnings disappointments or a wider market shift. Either of these could challenge the recent upbeat sentiment.

Find out about the key risks to this WorkmanLtd narrative.

Another View: SWS DCF Model Suggests Overvaluation

Looking from another angle, the SWS DCF model estimates WorkmanLtd’s fair value at ¥4,377.54, which is well below its current price of ¥6,930. This suggests the stock may be overvalued, even when considering projected future cash flows. Does this signal too much optimism in the current share price, or could growth still surprise?

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 WorkmanLtd 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 920 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 WorkmanLtd Narrative

If you see the story differently or want to draw your own insights from the numbers, it’s easy to craft a personalized view in just a few minutes. Do it your way

A good starting point is our analysis highlighting 2 key rewards investors are optimistic about regarding WorkmanLtd.

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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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