Is Yokogawa Electric Still Worth Attention After a 179% Five Year Rally?

If you have been watching Yokogawa Electric, you are not alone in wondering what to do with the stock after its impressive trajectory. Over the last five years, the company’s share price has soared by nearly 179%, outperforming many peers and indices. Recent trading sessions have kept up the positive momentum, with Yokogawa Electric returning 2.0% over the past week and month, and a notable 29.5% gain year to date. Even on a one-year timeline, shares are up an eye-catching 25.5%. The backdrop is ongoing market optimism around industrial automation, combined with a wave of global investment in digital transformation. These themes continue to animate investor enthusiasm, even as some begin to reassess risks in a market that had been running hot.

But strong stock performance naturally raises a key question for both current holders and prospective buyers: is Yokogawa Electric still good value, or has the price run ahead of itself? Interestingly, when we dig into the numbers using six widely-followed valuation checks, the company scores a 0, meaning it is not considered undervalued by any of these criteria right now. Of course, valuation is more than just a checklist, and the full story can only be told by weighing multiple approaches. In the next section, we will unpack these methods in detail before exploring an even sharper way to judge what Yokogawa Electric is really worth.

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

Approach 1: Yokogawa Electric Discounted Cash Flow (DCF) Analysis

The Discounted Cash Flow (DCF) model is a common way to estimate the value of a company by projecting its future cash flows and discounting them back to today’s value. Essentially, this approach asks: what are the company’s expected free cash flows worth in today’s money, adjusted for the time value of money and risk?

For Yokogawa Electric, the most recent trailing twelve months Free Cash Flow stands at ¥73.7 billion. Analysts forecast that, five years from now, the annual Free Cash Flow could be around ¥57.5 billion, with further projections, extrapolated by Simply Wall St, estimating annual FCF just over ¥63.4 billion a decade out. These figures suggest a moderately growing cash flow profile, though not a steep trajectory.

Based on these projections, the DCF model calculates an intrinsic value for Yokogawa Electric of ¥3,961 per share. Compared to the current share price, this implies the stock is trading around 10.7% above its intrinsic value. In other words, DCF analysis currently sees Yokogawa Electric as overvalued, with the share price running ahead of the company’s longer-term cash flow prospects.

Result: OVERVALUED

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

Our Discounted Cash Flow (DCF) analysis suggests Yokogawa Electric may be overvalued by 10.7%. Find undervalued stocks or create your own screener to find better value opportunities.

Approach 2: Yokogawa Electric Price vs Earnings

The Price-to-Earnings (PE) ratio is widely used to value profitable companies, as it measures how much investors are willing to pay today for each yen of earnings. For companies like Yokogawa Electric, which consistently generates profits, the PE ratio helps signal how the market is pricing current results and future prospects.

Interpreting the “right” PE ratio involves looking beyond simple averages. Typically, companies with stronger growth expectations or perceived lower risks justify higher PE ratios, while those with uncertain outlooks or higher risks deserve a discount.

Yokogawa Electric is currently trading at a PE ratio of 19.5x, ahead of both the peer average of 17.4x and the broader Electronic industry average of 14.3x. While this may seem elevated at first glance, context is key. Simply Wall St’s “Fair Ratio” for Yokogawa Electric is calculated at 17.3x. Unlike basic peer or industry comparisons, the Fair Ratio considers the company’s actual earnings growth, profit margins, risk profile, industry dynamics, and market capitalization to provide a more holistic benchmark. This proprietary measure helps to paint a truer picture of what would be a justified valuation for the stock.

Because Yokogawa’s current PE ratio is only modestly above its Fair Ratio—just over 2x higher—there is no major disconnect. The valuation appears reasonable for now, though not at a bargain level or particular discount.

Result: ABOUT RIGHT

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

Upgrade Your Decision Making: Choose your Yokogawa Electric Narrative

Earlier, we hinted at a more insightful way to understand what a company is really worth, so let’s introduce you to Narratives. On Simply Wall St’s platform, Narratives are an accessible tool that lets you build your own investing story for a company by combining your perspective on its future with your assumptions about revenue, earnings, and margins.

A Narrative connects a company’s story to a personalized financial forecast and then to an estimated fair value, making it easier to see not just what a stock is priced at, but why it might deserve that price. Used by millions of investors in the Community page, Narratives help you decide when to buy or sell by comparing your Fair Value to the current market price.

Best of all, Narratives update automatically when new information such as news or earnings is released, so your thinking stays current. For Yokogawa Electric, for example, one investor’s optimistic Narrative may forecast much higher future earnings, leading to a higher Fair Value, while another may be more cautious and arrive at a lower estimate, each reflecting their unique investment story.

Do you think there's more to the story for Yokogawa Electric? Create your own Narrative to let the Community know!

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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