Rigaku Holdings (TSE:268A): Evaluating Valuation After Taiwan Tech Center Launch and Expansion Into Semiconductors

Rigaku Holdings (TSE:268A) is expanding its footprint in Asia with the launch of the Rigaku Technology Center Taiwan, a new facility focused on supporting research, semiconductors, and life sciences in the region.

See our latest analysis for Rigaku Holdings.

Rigaku Holdings has seen its momentum build over the past quarter, with a 27% 90-day share price return. Meanwhile, the 1-year total shareholder return remains down around 21%. Recent expansion efforts, such as the new technology center, could be helping shift sentiment as the market reassesses Rigaku’s longer-term potential.

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But with recent double-digit gains and new expansion underway, is Rigaku Holdings now trading below its true value? Or has the market already priced in the company’s renewed growth ambitions?

Price-to-Earnings of 20.5: Is it justified?

Rigaku Holdings is trading at a price-to-earnings (P/E) ratio of 20.5, noticeably higher than the Japanese Electronic industry average of 15. This elevated multiple signals that investors may be pricing in stronger future growth or other qualitative advantages, despite the stock’s recent volatility.

The price-to-earnings ratio measures how much investors are willing to pay per yen of earnings. A higher P/E typically reflects expectations for higher future profits, but it can also indicate that the stock is expensive relative to its peers.

In this case, the market appears to be ascribing a growth premium to Rigaku Holdings, but recent earnings have not outpaced industry benchmarks. When compared to the estimated fair price-to-earnings ratio of 19.5, Rigaku’s current P/E stands at a premium. This suggests that the market is expecting results above what typical sector dynamics would imply.

If sector sentiment changes or growth expectations are revised, the market could re-rate towards the fair ratio. Explore the SWS fair ratio for Rigaku Holdings

Result: Price-to-Earnings of 20.5 (OVERVALUED)

However, if earnings momentum slows or sector valuations compress, Rigaku’s premium could quickly evaporate. This may put pressure on both sentiment and share price.

Find out about the key risks to this Rigaku Holdings narrative.

Another View: Discounted Cash Flow Perspective

Looking beyond earnings multiples, our DCF model suggests Rigaku Holdings is actually undervalued at its current share price, trading nearly 23% below an estimated fair value of ¥1272.35. This raises questions about recent market optimism. Are investors missing something, or is risk being underestimated?

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 Rigaku Holdings 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 848 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 Rigaku Holdings Narrative

If you see things differently or want to investigate more deeply, it only takes a few minutes to put together your own perspective. Do it your way.

A good starting point is our analysis highlighting 3 key rewards investors are optimistic about regarding Rigaku Holdings.

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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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