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Assessing Sekisui House (TSE:1928) Valuation After Dividend Hike and Updated Earnings Guidance

Simply Wall St · 2d ago

Dividend hike and earnings guidance reset the conversation

Sekisui House (TSE:1928) just lifted its second quarter dividend to ¥72 per share from ¥64 and paired that with fresh earnings guidance, giving investors a clearer view of income and growth prospects.

See our latest analysis for Sekisui House.

The upbeat guidance and dividend hike appear to be stabilising sentiment, with a 7 day share price return of 3.81% helping to ease this year to date weakness. A robust 5 year total shareholder return of 112.36% suggests the longer term story remains firmly constructive.

If Sekisui House's mix of income and growth has caught your attention, it could be a good moment to broaden your watchlist and uncover fast growing stocks with high insider ownership.

Yet with the shares still down year to date and trading modestly below analyst targets despite resilient growth, investors face a key question: is this a quietly undervalued compounder, or are markets already pricing in that future strength?

Price-to-earnings of 11.2x: Is it justified?

Sekisui House trades on a price-to-earnings ratio of 11.2x at the last close of ¥3460, sitting below both the broader Japanese market and its Consumer Durables peers. This points to a modest valuation tilt in investors' favour rather than exuberant pricing.

The price-to-earnings ratio compares what investors are willing to pay today for each unit of the company’s earnings, making it a core yardstick for a mature, profitable housebuilder with a long operating history. For Sekisui House, this lens is especially relevant because earnings quality is considered high and profits are expected to keep growing, even if not at breakneck speed.

Against that backdrop, a multiple of 11.2x looks restrained when set beside the Japanese market average of 14.2x and the Consumer Durables industry average of 11.6x. This suggests the market is not paying up for its forecast 7.22% annual earnings growth and long-term track record. Relative to the estimated “fair” price-to-earnings level of 20.8x derived from the SWS fair ratio framework, the current rating implies substantial room for the multiple to expand if sentiment or growth expectations improve.

Explore the SWS fair ratio for Sekisui House

Result: Price-to-earnings of 11.2x (UNDERVALUED)

However, softening housing demand or execution missteps in overseas projects could pressure margins and curb the multiple re rating that investors are anticipating.

Find out about the key risks to this Sekisui House narrative.

Another View: DCF flags a very different picture

While earnings multiples hint at value, our DCF model paints Sekisui House as significantly overvalued, with the current ¥3460 price sitting well above an estimated fair value of about ¥882. That is a large gap, raising the question of which signal investors should focus on.

Look into how the SWS DCF model arrives at its fair value.

1928 Discounted Cash Flow as at Dec 2025
1928 Discounted Cash Flow as at Dec 2025

Simply Wall St performs a discounted cash flow (DCF) on every stock in the world every day (check out Sekisui House 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 908 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 Sekisui House Narrative

If you see the numbers differently or prefer to draw your own conclusions, you can build a personalised view in just minutes: Do it your way.

A great starting point for your Sekisui House research is our analysis highlighting 3 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.