Ricoh (TSE:7752) Partners with Neat: Taking Stock of Valuation After Strategic AV Tech Expansion

Ricoh Company (TSE:7752) just signed a top-tier global partnership with Neat to enhance its AV Managed Services lineup. By tapping into Neat’s AI-driven audiovisual tech, Ricoh aims to bring more advanced meeting solutions to its workplace experience offerings.

See our latest analysis for Ricoh Company.

Ricoh’s latest global partnership comes as the stock shows signs of stabilizing after a challenging start to the year, with the share price currently at ¥1,322.5. The market’s reaction has been cautious, with the year-to-date share price return down 23.8%. However, the 3-year and 5-year total shareholder returns of 34.8% and 108.9% suggest real long-term value creation and momentum that outweigh recent setbacks.

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With shares trading at a notable discount to some analyst targets and solid long-term returns, the question for investors is whether Ricoh remains undervalued at today’s levels or if the market already reflects its growth prospects.

Price-to-Earnings of 12.3x: Is it justified?

Shares of Ricoh are trading at a price-to-earnings (P/E) ratio of 12.3x, slightly below both its industry peers and what fundamental models suggest might be fair. Compared to the last close price of ¥1,322.5, this makes Ricoh appear to be relatively attractively priced for investors hunting for value in the tech sector.

The P/E ratio measures how much investors are willing to pay for each yen of Ricoh's current earnings. It is a key metric for comparing profitability and price expectations across similar companies. This makes it particularly relevant for established businesses like Ricoh.

At 12.3x, Ricoh's P/E is lower than both the peer average (15.8x) and the JP Tech industry average (12.6x). It is also comfortably below the estimated fair P/E ratio of 18.5x. This implies the market might still be undervaluing Ricoh's improved profits and future earnings potential relative to similar firms.

Explore the SWS fair ratio for Ricoh Company

Result: Price-to-Earnings of 12.3x (UNDERVALUED)

However, soft annual revenue growth and a negative one-year return highlight that challenges remain, and any reversal in sentiment could hamper recovery.

Find out about the key risks to this Ricoh Company narrative.

Another View: Our DCF Model Tells a Similar Story

Stepping away from ratios, our DCF model shows Ricoh trading at a significant discount, currently 30.8% below its estimated fair value of ¥1,911. This method takes into account future cash flows, suggesting the market could be underestimating Ricoh’s true worth. Which approach ultimately offers greater insight for investors?

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 Ricoh Company 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 900 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 Ricoh Company Narrative

If you see the story differently or want to dig into the numbers yourself, you can craft your own perspective on Ricoh in just minutes. Do it your way

A great starting point for your Ricoh Company research is our analysis highlighting 4 key rewards and 2 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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