Assessing TIS (TSE:3626) Valuation After Upgraded Earnings Guidance and Higher Interim Dividend Announcement

TIS (TSE:3626) made headlines after raising its earnings guidance for the fiscal year ending March 2026 and announcing a higher interim dividend, which signals increased confidence in its ongoing performance and financial outlook.

See our latest analysis for TIS.

Shares of TIS have enjoyed clear upward momentum lately, with a 38.8% year-to-date share price return and total shareholder return of 33.4% over the past year. The upbeat earnings guidance and higher interim dividend announced this quarter add to recent buyback activity and strategic moves in the shareholder structure. These factors reinforce a narrative of solid, long-term growth leadership in the sector.

If you’re keeping an eye out for technology stocks with compelling trends of their own, it’s a great moment to discover See the full list for free.

With TIS’s robust performance and optimistic guidance, investors are left wondering whether the stock is still undervalued or if the recent rally means future growth is already reflected in the share price.

Price-to-Earnings of 21.7x: Is it justified?

At the last close of ¥5,066, TIS trades at a price-to-earnings (P/E) ratio of 21.7x, which positions the stock as more expensive than the average for its industry but slightly less so compared to its direct peers.

The P/E multiple measures how much investors are willing to pay for every yen of earnings. In the software and IT sector, a higher P/E often signals expectations of strong growth, high profitability, or perceived quality in future results.

For TIS, the current multiple exceeds the JP IT industry average of 17.3x. This suggests the market is attaching a premium, perhaps due to TIS's consistent profit growth and reputation for high-quality earnings. However, when compared to peers, TIS actually offers better value, trading below the peer group’s average P/E of 22.7x. Additionally, its ratio is still under the estimated fair P/E of 26x, a level the market might approach if strong performance continues.

Explore the SWS fair ratio for TIS

Result: Price-to-Earnings of 21.7x (ABOUT RIGHT)

However, slower-than-expected revenue growth or changes in industry dynamics could quickly challenge the current optimism and reduce future return expectations.

Find out about the key risks to this TIS narrative.

Another View: Discounted Cash Flow Points to Risk

While the price-to-earnings ratio tells one side of the valuation story, our DCF model looks at the company’s future cash flows to gauge value. According to this model, TIS shares are trading above our estimate of fair value, which could mean upside is already priced in. Is the price running ahead of real business growth?

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 TIS 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 855 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 TIS Narrative

If you have a different perspective or would rather dig into the numbers personally, you can easily assemble your own story 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 TIS.

Looking for more investment ideas?

Supercharge your investment search with powerful screeners designed to uncover fresh opportunities you might be missing. Go beyond the obvious and give your portfolio an edge.

• Capitalize on the next wave of innovation by jumping into these 25 AI penny stocks showing early leadership in cutting-edge artificial intelligence.
• Boost your potential for steady income by tapping into these 15 dividend stocks with yields > 3% delivering strong yields and robust payout track records.
• Catch early-stage growth before the crowd by scanning these 3575 penny stocks with strong financials primed for breakout momentum in dynamic sectors.

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.

Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team@simplywallst.com