Stock Analysis

Is Mitsui O.S.K. Lines, Ltd. (TSE:9104) Potentially Undervalued?

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Mitsui O.S.K. Lines, Ltd. (TSE:9104) received a lot of attention from a substantial price movement on the TSE over the last few months, increasing to JP¥5,378 at one point, and dropping to the lows of JP¥4,429. Some share price movements can give investors a better opportunity to enter into the stock, and potentially buy at a lower price. A question to answer is whether Mitsui O.S.K. Lines' current trading price of JP¥4,550 reflective of the actual value of the large-cap? Or is it currently undervalued, providing us with the opportunity to buy? Let’s take a look at Mitsui O.S.K. Lines’s outlook and value based on the most recent financial data to see if there are any catalysts for a price change.

See our latest analysis for Mitsui O.S.K. Lines

What's The Opportunity In Mitsui O.S.K. Lines?

Great news for investors – Mitsui O.S.K. Lines is still trading at a fairly cheap price 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 Mitsui O.S.K. Lines’s ratio of 5.96x is below its peer average of 8.09x, which indicates the stock is trading at a lower price compared to the Shipping industry. However, given that Mitsui O.S.K. Lines’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 another chance to buy in the future. This is based on its high beta, which is a good indicator for share price volatility.

Can we expect growth from Mitsui O.S.K. Lines?

TSE:9104 Earnings and Revenue Growth April 14th 2024

Investors looking for growth in their portfolio may want to consider the prospects of a company before buying its shares. Although value investors would argue that it’s the intrinsic value relative to the price that matter the most, a more compelling investment thesis would be high growth potential at a cheap price. However, with an extremely negative double-digit change in profit expected over the next couple of years, near-term growth is certainly not a driver of a buy decision. It seems like high uncertainty is on the cards for Mitsui O.S.K. Lines, at least in the near future.

What This Means For You

Are you a shareholder? Although 9104 is currently trading below the industry PE ratio, the negative profit outlook does bring on some uncertainty, which equates to higher risk. We recommend you think about whether you want to increase your portfolio exposure to 9104, or whether diversifying into another stock may be a better move for your total risk and return.

Are you a potential investor? If you’ve been keeping tabs on 9104 for some time, but hesitant on making the leap, we recommend you dig deeper into the stock. Given its current price multiple, now is a great time to make a decision. But keep in mind the risks that come with negative growth prospects in the future.

Keep in mind, when it comes to analysing a stock it's worth noting the risks involved. Our analysis shows 4 warning signs for Mitsui O.S.K. Lines (1 is a bit concerning!) and we strongly recommend you look at them before investing.

If you are no longer interested in Mitsui O.S.K. Lines, you can use our free platform to see our list of over 50 other stocks with a high growth potential.

Valuation is complex, but we're helping make it simple.

Find out whether Mitsui O.S.K. Lines is potentially over or undervalued by checking out our comprehensive analysis, which includes fair value estimates, risks and warnings, dividends, insider transactions and financial health.

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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.