Nippon Yusen Kabushiki Kaisha (TSE:9101): Valuation Check as It Expands Low-Carbon Methanol Bunkering Network

Nippon Yusen Kabushiki Kaisha (TSE:9101) just stepped further into the energy transition, joining ABS, ENEOS and SEACOR to study a low carbon methanol bunkering network along the U.S. Gulf Coast.

See our latest analysis for Nippon Yusen Kabushiki Kaisha.

The move fits a wider story, with the share price recently ticking up from short term weakness even as the 1 year total shareholder return of 2.54 percent trails its powerful 3 year and 5 year compounding. This suggests momentum is pausing rather than broken.

If this cleaner fuel push has you thinking about where growth and capital are heading next, it could be worth exploring aerospace and defense stocks as another pocket of long term structural change.

With shares modestly below analyst targets after a stellar multi year run but softer recent earnings, is Nippon Yusen Kabushiki Kaisha now trading at a discount, or is the market already pricing in its next growth wave?

Most Popular Narrative Narrative: 5.7% Undervalued

With the narrative fair value sitting modestly above the last close of ¥4,949, the story hinges on how shrinking earnings can still justify a higher multiple.

The analysts have a consensus price target of ¥5339.091 for Nippon Yusen Kabushiki Kaisha based on their expectations of its future earnings growth, profit margins and other risk factors. However, there is a degree of disagreement amongst analysts, with the most bullish reporting a price target of ¥6900.0, and the most bearish reporting a price target of just ¥3530.0.

Read the complete narrative.

Curious how falling revenues, slimmer margins and a richer future earnings multiple can still add up to upside from here? The full narrative reveals the math behind that tension.

Result: Fair Value of ¥5248.18 (UNDERVALUED)

Have a read of the narrative in full and understand what's behind the forecasts.

However, resilient demand, successful structural reforms and ongoing buybacks could support higher earnings and sentiment, which may undermine the idea that today’s valuation is generous.

Find out about the key risks to this Nippon Yusen Kabushiki Kaisha narrative.

Another Angle On Value

There is a catch. While the narrative model points to upside, our DCF work paints a different picture, suggesting Nippon Yusen Kabushiki Kaisha is trading above an intrinsic value of around ¥2,584. Does that imply earnings risk is still underappreciated, or is the model too harsh on shipping cycles?

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 Nippon Yusen Kabushiki Kaisha 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 903 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 Nippon Yusen Kabushiki Kaisha Narrative

If you would rather test the numbers yourself and challenge this storyline, you can build a fresh perspective in just a few minutes: Do it your way.

A great starting point for your Nippon Yusen Kabushiki Kaisha research is our analysis highlighting 2 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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