Is It Too Late To Consider Buying Nippon Yusen Kabushiki Kaisha (TSE:9101)?

Today we're going to take a look at the well-established Nippon Yusen Kabushiki Kaisha (TSE:9101). The company's stock saw a significant share price rise of 27% in the past couple of months on the TSE. The recent jump in the share price has meant that the company is trading at close to its 52-week high. With many analysts covering the large-cap stock, we may expect any price-sensitive announcements have already been factored into the stock’s share price. But what if there is still an opportunity to buy? Today we will analyse the most recent data on Nippon Yusen Kabushiki Kaisha’s outlook and valuation to see if the opportunity still exists.

Check out our latest analysis for Nippon Yusen Kabushiki Kaisha

What Is Nippon Yusen Kabushiki Kaisha Worth?

The share price seems sensible at the moment according to our price multiple model, where we compare the company's price-to-earnings ratio to the industry average. In this instance, we’ve used the price-to-earnings (PE) ratio given that there is not enough information to reliably forecast the stock’s cash flows. We find that Nippon Yusen Kabushiki Kaisha’s ratio of 10.1x is trading slightly above its industry peers’ ratio of 9.23x, which means if you buy Nippon Yusen Kabushiki Kaisha today, you’d be paying a relatively reasonable price for it. And if you believe Nippon Yusen Kabushiki Kaisha should be trading in this range, then there isn’t really any room for the share price grow beyond the levels of other industry peers over the long-term. So, is there another chance to buy low in the future? Given that Nippon Yusen Kabushiki Kaisha’s share is fairly volatile (i.e. its price movements are magnified relative to the rest of the market) this could mean the price can sink lower, giving us an opportunity to buy later on. This is based on its high beta, which is a good indicator for share price volatility.

What kind of growth will Nippon Yusen Kabushiki Kaisha generate?

Investors looking for growth in their portfolio may want to consider the prospects of a company before buying its shares. Buying a great company with a robust outlook at a cheap price is always a good investment, so let’s also take a look at the company's future expectations. Though in the case of Nippon Yusen Kabushiki Kaisha, it is expected to deliver a highly negative earnings growth in the next few years, which doesn’t help build up its investment thesis. It appears that risk of future uncertainty is high, at least in the near term.

What This Means For You

Are you a shareholder? 9101 seems priced close to industry peers right now, but given the uncertainty from negative returns in the future, this could be the right time to de-risk your portfolio. Is your current exposure to the stock optimal for your total portfolio? And is the opportunity cost of holding a negative-outlook stock too high? Before you make a decision on 9101, take a look at whether its fundamentals have changed.

Are you a potential investor? If you’ve been keeping an eye on 9101 for a while, now may not be the most optimal time to buy, given it is trading around industry price multiples. This means there’s less benefit from mispricing. In addition to this, the negative growth outlook increases the risk of holding the stock. However, there are also other important factors we haven’t considered today, which can help crystallize your views on 9101 should the price fluctuate below the industry PE ratio.

So if you'd like to dive deeper into this stock, it's crucial to consider any risks it's facing. For example, Nippon Yusen Kabushiki Kaisha has 4 warning signs (and 1 which doesn't sit too well with us) we think you should know about.

If you are no longer interested in Nippon Yusen Kabushiki Kaisha, you can use our free platform to see our list of over 50 other stocks with a high growth potential.

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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.