Alps Alpine (TSE:6770) Share Buyback Approved: What Does It Mean for the Company’s Valuation?

The board of Alps Alpine (TSE:6770) has approved a buyback of its own shares via ToSTNeT-3, a move that often catches investor interest and could reflect the company's confidence in its future outlook.

See our latest analysis for Alps Alpine.

Alps Alpine’s share price has gained real momentum lately, with a 22.1% return over the past 90 days and a strong year-to-date jump of 20.3%. Importantly, the one-year total shareholder return sits at 27.2%. Zooming out to three years, long-term shareholders have seen close to 90% returns. The recent buyback news could reflect management’s confidence, adding another layer of optimism to the company’s ongoing turnaround narrative.

If company-led buybacks have you rethinking your portfolio, now is a great time to broaden your search and discover fast growing stocks with high insider ownership

With the buyback in focus and shares soaring, investors are left wondering if Alps Alpine is still undervalued or if the recent rally means future growth has already been fully priced in.

Price-to-Earnings of 10.8x: Is it justified?

Alps Alpine’s stock trades at a price-to-earnings (P/E) ratio of 10.8x, meaning investors are paying 10.8 times the company's earnings per share at the last close of ¥1,889.5. This is notably lower than peers, which suggests investors may see Alps Alpine as undervalued relative to the sector, or that the market is skeptical about the quality or sustainability of its earnings.

The P/E ratio indicates how much investors are willing to pay today for a yen of future company earnings. For technology firms like Alps Alpine, the P/E is a common metric to quickly gauge market expectations for profit growth or risk factors that may affect the business model.

Relative to the JP market average (14.7x) and its sector average (15x), Alps Alpine’s lower multiple implies the stock is being priced conservatively. The fair price-to-earnings ratio estimated for Alps Alpine is 13.1x, which hints that as performance stabilizes, the market could re-rate the stock higher in line with sector norms.

Explore the SWS fair ratio for Alps Alpine

Result: Price-to-Earnings of 10.8x (UNDERVALUED)

However, subdued annual revenue and net income growth signal potential challenges that could limit further upside if the recovery loses steam.

Find out about the key risks to this Alps Alpine narrative.

Another View: Challenging the Multiple

While Alps Alpine looks attractively valued on a price-to-earnings basis, the Simply Wall St DCF model presents a very different perspective. According to our DCF analysis, the current share price is significantly above the estimate of fair value. Could enthusiasm for the turnaround be running ahead of fundamentals?

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 Alps Alpine 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 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 Alps Alpine Narrative

If you see the story differently or want to dig deeper yourself, it only takes a few minutes to build your own perspective and share what you find with others, so why not Do it your way

A great starting point for your Alps Alpine research is our analysis highlighting 3 key rewards and 3 important warning signs that could impact your investment decision.

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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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