What Does JAPAN MATERIAL Co., Ltd.'s (TSE:6055) Share Price Indicate?

JAPAN MATERIAL Co., Ltd. (TSE:6055), is not the largest company out there, but it saw significant share price movement during recent months on the TSE, rising to highs of JP¥2,727 and falling to the lows of JP¥2,315. 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 JAPAN MATERIAL's current trading price of JP¥2,315 reflective of the actual value of the small-cap? Or is it currently undervalued, providing us with the opportunity to buy? Let’s take a look at JAPAN MATERIAL’s outlook and value based on the most recent financial data to see if there are any catalysts for a price change.

View our latest analysis for JAPAN MATERIAL

Is JAPAN MATERIAL Still Cheap?

The stock seems fairly valued at the moment according to our valuation model. It’s trading around 4.4% below our intrinsic value, which means if you buy JAPAN MATERIAL today, you’d be paying a reasonable price for it. And if you believe the company’s true value is ¥2422.12, then there isn’t much room for the share price grow beyond what it’s currently trading. What's more, JAPAN MATERIAL’s share price may be more stable over time (relative to the market), as indicated by its low beta.

What does the future of JAPAN MATERIAL 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. JAPAN MATERIAL's earnings over the next few years are expected to increase by 96%, 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? 6055’s optimistic future growth appears to have been factored into the current share price, 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 confidence to invest in the company should the price drop below its fair value?

Are you a potential investor? If you’ve been keeping an eye on 6055, 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 diving deeper into other factors such as the strength of its balance sheet, in order to take advantage of the next price drop.

With this in mind, we wouldn't consider investing in a stock unless we had a thorough understanding of the risks. Every company has risks, and we've spotted 1 warning sign for JAPAN MATERIAL you should know about.

If you are no longer interested in JAPAN MATERIAL, 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.