Discover 3 Japanese Stocks Estimated To Be Trading Up To 42.6% Below Intrinsic Value

Simply Wall St · 10/17 20:08

Japan's stock markets have experienced a positive trend recently, with the Nikkei 225 Index gaining 2.45% and the broader TOPIX Index rising by 0.45%, supported by a weaker yen which has enhanced the profit outlook for exporters. In this environment, identifying undervalued stocks can be particularly appealing as investors seek opportunities that may offer significant potential for appreciation when trading below their intrinsic value.

Top 10 Undervalued Stocks Based On Cash Flows In Japan

Name Current Price Fair Value (Est) Discount (Est)
Hagiwara Electric Holdings (TSE:7467) ¥3430.00 ¥6679.99 48.7%
Akatsuki (TSE:3932) ¥2014.00 ¥3735.74 46.1%
Eternal Hospitality GroupLtd (TSE:3193) ¥4085.00 ¥7754.28 47.3%
Pilot (TSE:7846) ¥4627.00 ¥8885.49 47.9%
Management SolutionsLtd (TSE:7033) ¥1950.00 ¥3835.42 49.2%
ServerworksLtd (TSE:4434) ¥2373.00 ¥4297.96 44.8%
S-Pool (TSE:2471) ¥369.00 ¥692.48 46.7%
Adventure (TSE:6030) ¥4030.00 ¥7361.84 45.3%
Gift Holdings (TSE:9279) ¥3400.00 ¥6545.88 48.1%
KeePer Technical Laboratory (TSE:6036) ¥4215.00 ¥7823.04 46.1%

Click here to see the full list of 85 stocks from our Undervalued Japanese Stocks Based On Cash Flows screener.

Here we highlight a subset of our preferred stocks from the screener.

Fujio Food Group (TSE:2752)

Overview: Fujio Food Group Inc. operates restaurants both in Japan and internationally, with a market cap of ¥61.60 billion.

Operations: The company's revenue segments include ¥1.60 billion from the FC Business and ¥28.77 billion from the Directly Managed Business.

Estimated Discount To Fair Value: 25.7%

Fujio Food Group is trading at ¥1,354, significantly below its estimated fair value of ¥1,821.71, indicating it may be undervalued based on cash flows. The company is expected to become profitable within three years and has a revenue growth forecast of 6.5% annually, outpacing the Japanese market's 4.3%. However, insufficient data prevents a clear assessment of future return on equity performance.

TSE:2752 Discounted Cash Flow as at Oct 2024
TSE:2752 Discounted Cash Flow as at Oct 2024

PARK24 (TSE:4666)

Overview: PARK24 Co., Ltd. operates and manages parking facilities both in Japan and internationally, with a market cap of ¥313.98 billion.

Operations: The company's revenue is derived from its Mobility Business, which contributes ¥107.36 million, the Parking Lot Business in Japan with ¥178.06 million, and the Parking Lot Business Overseas generating ¥79.23 million.

Estimated Discount To Fair Value: 26.6%

PARK24 is trading at ¥1,840.5, well below its estimated fair value of ¥2,506.19, highlighting potential undervaluation based on cash flows. Despite high debt levels, earnings are projected to grow 16.35% annually—faster than the Japanese market's 8.7%. Recent strategic moves include a pilot rideshare service with Uber Japan and Royal Limousine in Tokyo, potentially increasing vehicle utilization and revenue streams if successful in addressing operational challenges.

TSE:4666 Discounted Cash Flow as at Oct 2024
TSE:4666 Discounted Cash Flow as at Oct 2024

Japan Investment Adviser (TSE:7172)

Overview: Japan Investment Adviser Co., Ltd. offers a range of financial solutions in Japan and has a market cap of ¥63.57 billion.

Operations: The company generates revenue from its Finance Solution segment, amounting to ¥27.86 billion.

Estimated Discount To Fair Value: 42.6%

Japan Investment Adviser is trading at ¥1,051, significantly below its estimated fair value of ¥1,830.17, suggesting undervaluation based on cash flows. The company reported a substantial earnings growth of 710.7% over the past year and forecasts revenue growth at 25.8% annually—outpacing the Japanese market's average. Despite recent shareholder dilution and dividend reductions from ¥16 to ¥12 per share, its operating lease business remains robust amid yen depreciation benefits.

TSE:7172 Discounted Cash Flow as at Oct 2024
TSE:7172 Discounted Cash Flow as at Oct 2024

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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.