Is OMRON Attractively Priced After a 53.9% Five Year Share Price Slide?

• If you are wondering whether OMRON is quietly turning into a value opportunity or if the recent share price slide is a warning sign, you are not alone. That is exactly what we will unpack here.
• The stock has inched up 1.4% over the last week but is still down 8.5% over 30 days, with deeper drawdowns of 23.5% year to date and 53.9% over five years. This naturally raises questions about whether the market has overshot on pessimism.
• Recent coverage has focused on OMRON's push into automation and healthcare related technologies, and its efforts to sharpen focus on higher margin, structural growth areas. This has helped frame the stock as a longer term transformation story rather than a short term trade. At the same time, headlines about cyclical softness in factory automation demand and global macro uncertainty have kept a cloud over sentiment, which helps explain why the share price has struggled to find a durable floor.
• On our numbers, OMRON currently scores a 0 out of 6 on valuation checks. On the surface it does not look obviously cheap, but the real question is what different valuation approaches say about that score and whether there is an even smarter way to read the market's pricing. We will come back to that at the end.

OMRON scores just 0/6 on our valuation checks. See what other red flags we found in the full valuation breakdown.

Approach 1: OMRON Discounted Cash Flow (DCF) Analysis

The Discounted Cash Flow model estimates what a business is worth by projecting its future cash flows and discounting them back to today, so that all those future yen are expressed in present value terms.

For OMRON, the latest twelve month free cash flow is about ¥12.2 Billion. Analysts and internal estimates project this to rise to roughly ¥40.9 Billion by the 2030 financial year, with a 2 stage Free Cash Flow to Equity model used to bridge the path from current levels to that longer term outlook. Near term forecasts (up to around five years) come from analysts, while the later years are extrapolated to reflect a maturing growth profile.

When all of those projected cash flows are discounted back, the model produces an estimated intrinsic value of around ¥2,585 per share. Compared with the current market price, this suggests the shares are about 52.6% overvalued rather than a hidden bargain.

Result: OVERVALUED

Our Discounted Cash Flow (DCF) analysis suggests OMRON may be overvalued by 52.6%. Discover 925 undervalued stocks or create your own screener to find better value opportunities.

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

Approach 2: OMRON Price vs Earnings

For a profitable business like OMRON, the price to earnings ratio is a straightforward way to gauge what investors are paying for each yen of current profits. A higher PE can be associated with expectations of stronger growth or relatively low risk in the earnings stream, while slower growth or higher uncertainty are typically associated with a lower, more conservative PE.

OMRON currently trades on about 27.1x earnings, which is above the broader Electronic industry average of roughly 14.4x and also higher than the peer group average of around 25.9x. Simply Wall St goes a step further by estimating a Fair Ratio of 22.7x, which reflects what would be considered reasonable for OMRON once its specific earnings growth profile, profitability, size and risk factors are taken into account. This tailored Fair Ratio is often more informative than a simple comparison with peers, because it is grounded in the company’s own fundamentals rather than broad sector snapshots.

Since OMRON’s actual PE of 27.1x sits meaningfully above the 22.7x Fair Ratio, the stock appears expensive based on earnings.

Result: OVERVALUED

PE ratios tell one story, but what if the real opportunity lies elsewhere? Discover 1441 companies where insiders are betting big on explosive growth.

Upgrade Your Decision Making: Choose your OMRON Narrative

Earlier we mentioned that there is an even better way to understand valuation, so let us introduce you to Narratives, a smarter, more flexible way to invest that connects the story you believe about a company with the numbers behind it. A Narrative is simply your perspective on OMRON’s future, translated into specific assumptions for revenue growth, margins, risk and ultimately a fair value estimate. On Simply Wall St, millions of investors build and share these Narratives in the Community page, where each one links OMRON’s business story to a forecast and then to a fair value that can be compared directly with today’s share price to decide whether to buy, hold or sell. Because Narratives on the platform are dynamically updated when fresh news, guidance or earnings are released, your view is never static or stale. For example, one OMRON Narrative might assume a low fair value and modest growth while another assumes a much higher fair value driven by stronger automation demand, and the platform lets you see and compare both in one place.

Do you think there's more to the story for OMRON? Head over to our Community to see what others are saying!

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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