Assessing SCREEN Holdings After 17.9% Surge and New AI Manufacturing Agreement

If you have been watching SCREEN Holdings lately and wondering whether now is the time to get in, you are definitely not alone. With shares closing most recently at 13,515 and a value score of 3 out of 6 for undervaluation, there is a lot to unpack about how the market is seeing this stock right now. Over the past month, SCREEN Holdings has surged by 17.9%, and if you zoom out further to year-to-date, returns sit at an impressive 40.6%. Looking back even further, the company has delivered a stellar 271.6% over three years, and an eye-popping 437.9% over five.

What is driving all this action? Much of it can be traced to positive market sentiment around semiconductor equipment suppliers, with SCREEN Holdings benefiting from continued optimism in global chip production trends. Of course, the stock is not immune to short-term jitters. Just last week, it dipped 1.9% in part due to normal volatility and some sector rotation. But the bigger picture shows that investors have consistently rewarded the company’s position in the evolving tech landscape.

Still, with so many price milestones, the real question for any investor is simple: does SCREEN Holdings still represent good value? We will start by breaking down how the company stacks up on key valuation metrics, each one designed to spot a bargain or a bubble, and then move on to a smarter, big-picture way to weigh its value at the end of this article.

SCREEN Holdings delivered 28.7% returns over the last year. See how this stacks up to the rest of the Semiconductor industry.

Approach 1: SCREEN Holdings Discounted Cash Flow (DCF) Analysis

A Discounted Cash Flow (DCF) model estimates a company's true value by projecting its future cash flows and then discounting those amounts back to today's money. This reflects the time value of money and inherent risks. For SCREEN Holdings, the DCF model used is a two-stage Free Cash Flow to Equity approach, applied in Japanese yen.

Currently, SCREEN Holdings produced ¥75.3 billion in free cash flow over the last twelve months. Analysts provide direct forecasts for the next five years, projecting an upward trend, with the company's free cash flow expected to reach ¥104.9 billion by the year ending March 2030. Further projections beyond analyst estimates are generated using extrapolation methods.

This analysis results in an estimated intrinsic value of ¥13,368 per share. When compared to the latest share price of ¥13,515, this suggests the stock is about 1.1% overvalued, which remains well within the margin of error for such models. In practical terms, this means SCREEN Holdings' current price closely aligns with its calculated fundamental value based on expected future cash flows.

Result: ABOUT RIGHT

Head to the Valuation section of our Company Report for more details on how we arrive at this Fair Value for SCREEN Holdings.

Simply Wall St performs a valuation analysis on every stock in the world every day (check out SCREEN Holdings's valuation analysis). We show the entire calculation in full. You can track the result in your watchlist or portfolio and be alerted when this changes.

Approach 2: SCREEN Holdings Price vs Earnings

The Price-to-Earnings (PE) ratio is a popular way to value profitable companies, as it shows how much investors are willing to pay for each yen of earnings. It is especially useful here because SCREEN Holdings has delivered consistent profits, making the PE a straightforward measure of market sentiment and value.

What makes a “fair” PE ratio can vary depending on growth expectations and risk. Higher growth or stable earnings usually justify a higher PE, while more risk or slower growth can pull it lower. SCREEN Holdings currently trades at a PE ratio of 13.0x, which is lower than both the semiconductor industry average of 16.0x and the average for its peers at 30.5x. This suggests investors are pricing SCREEN Holdings less aggressively than competitors.

Simply Wall St’s proprietary Fair Ratio at 18.3x gives more context. Unlike rough comparisons with industry or peer averages, the Fair Ratio builds in factors like forecasted growth, profit margins, the company’s specific risk profile, and its market cap. This offers a more holistic, apples-to-apples sense of what would be reasonable for SCREEN Holdings today.

Since the company’s actual PE ratio of 13.0x is moderately below the Fair Ratio, this analysis frames SCREEN Holdings as somewhat undervalued on earnings based on its overall profile.

Result: UNDERVALUED

PE ratios tell one story, but what if the real opportunity lies elsewhere? Discover companies where insiders are betting big on explosive growth.

Upgrade Your Decision Making: Choose your SCREEN Holdings Narrative

Earlier, we mentioned that there is an even better way to understand valuation, so let's introduce you to Narratives. A Narrative is a simple, story-driven approach to investing where you connect your unique perspective, the way you see a company's future growth, risks, and strengths, to specific financial forecasts and, ultimately, a fair value estimate for the stock.

This approach goes beyond just crunching numbers or comparing ratios. Narratives help you tie together what you believe about SCREEN Holdings' business, trends, and competition, then translate those beliefs into revenue, earnings, or margin projections. The result is a fair value that you can compare to the current share price, making it easier to decide when to buy, hold, or sell.

On Simply Wall St, millions of investors use Narratives right from the Community page. Narratives are dynamic and automatically update as new company news or earnings come in, so your view stays relevant and informed with the latest data.

For SCREEN Holdings, for instance, one investor might see rapid AI adoption and strong recurring revenues as reasons to set a high fair value, while another might focus on growing competition or sector volatility and take a more cautious view. Narratives offer an accessible tool that reflects real investor thinking alongside traditional valuation models.

Do you think there's more to the story for SCREEN Holdings? Create your own Narrative to let the Community know!

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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