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Kanematsu (TSE:8020) has drawn fresh attention after a 2.3% decline over the last day, following a strong past 3 months where the share price return stands at 36.2%.
Over the past month, the stock is up 11.2%, while the 1 year total return is 85.5%. That backdrop gives investors some recent context before weighing Kanematsu’s current earnings profile and valuation.
See our latest analysis for Kanematsu.
For Kanematsu, the recent 2.3% one day share price decline comes after a strong run. Momentum remains positive given the 30 day share price return of 11.2% and the 1 year total shareholder return of 85.5%.
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With Kanematsu trading at ¥2,229.5 and sitting at a 7.5% intrinsic discount plus a 16.7% gap to analyst targets, you have to ask: is there still an opportunity here, or is future growth already priced in?
Kanematsu is trading on a P/E of 11.5x at a last close of ¥2,229.5, and current indicators suggest the shares are priced below several value markers in its peer group.
The P/E multiple simply compares the share price to earnings per share, so it is a quick way to see how the market is valuing each yen of profit. For a trading oriented group like Kanematsu, investors often watch this closely because earnings can be sensitive to economic cycles and sector conditions.
Here, the current P/E of 11.5x screens as good value in several ways. It sits below the estimated fair P/E of 15.7x that our fair ratio work points to as a reference level for the market, and it is also lower than the JP Trade Distributors industry average of 12x and the peer average of 12.6x. Taken together, those gaps indicate the market is paying less for Kanematsu’s earnings than for similar companies, even though the company has reported high quality earnings, 5 year annual earnings growth of 16.3% and 23.8% earnings growth over the last year that exceeded the wider Trade Distributors industry.
Explore the SWS fair ratio for Kanematsu
Result: Price-to-Earnings of 11.5x (UNDERVALUED)
However, you also have to weigh risks such as earnings sensitivity to economic cycles, as well as the broad mix of trading activities across multiple segments and regions.
