Systena (TSE:2317) Valuation in Focus After Upgraded Earnings Outlook and Dividend Forecast

Systena (TSE:2317) just boosted its consolidated earnings outlook for the fiscal year ending March 2026, highlighting effective shifts toward growth businesses, higher contract prices, and more orders for value-added projects.

See our latest analysis for Systena.

Fresh momentum has gathered behind Systena this year, with its upgraded earnings outlook and a higher year-end dividend forecast grabbing investor attention. That excitement shows in the numbers, as the share price has surged 45% year-to-date and delivered a 53% total shareholder return over the past twelve months. These are clear signs of building optimism around the company’s growth strategy and improving fundamentals.

If Systena’s stronger outlook has you thinking bigger, this could be the perfect time to broaden your search and discover fast growing stocks with high insider ownership

But with the stock’s impressive rally and optimism running high, is there still room for upside? Or has the market already factored in Systena’s improved prospects, leaving little potential for further gains?

Price-to-Earnings of 18.2x: Is it justified?

Systena’s shares trade at a price-to-earnings ratio of 18.2x, which is well below the averages seen among both industry peers and the broader software sector. At the last close of ¥521, this pricing makes the stock appear attractively valued in today’s market.

The price-to-earnings (P/E) ratio reflects how much investors are willing to pay for each yen of the company’s earnings. It matters, especially for software firms, because it brings together perspectives on current profitability and future growth prospects. A lower P/E suggests the market may not be fully crediting recent improvements in earnings and outlook.

Systena’s P/E of 18.2x stands out against the JP Software industry average of 21.8x and a peer average of 56.2x. The company’s ratio is also comfortably below its estimated fair price-to-earnings level of 22x, which may signal potential room for further upside as market perceptions catch up to fundamentals.

Explore the SWS fair ratio for Systena

Result: Price-to-Earnings of 18.2x (UNDERVALUED)

However, downside risks remain if revenue growth slows or if market sentiment shifts. These factors could potentially challenge the current optimism around Systena’s valuation.

Find out about the key risks to this Systena narrative.

Another View: What Does Our DCF Model Say?

While the price-to-earnings ratio paints Systena as undervalued, our SWS DCF model offers a different perspective. According to this approach, the current share price of ¥521 is above the estimated fair value of ¥507.56. This suggests the stock may actually be somewhat overvalued based on expected future cash flows.

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 Systena 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 865 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 Systena Narrative

If you see things differently or want to dig into the numbers yourself, you can quickly shape your own perspective and insights here: Do it your way

A good starting point is our analysis highlighting 5 key rewards investors are optimistic about regarding Systena.

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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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