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A Look At Morinaga Milk Industry (TSE:2264) Valuation After Completing Its Latest Share Buyback

Simply Wall St · 4d ago

Morinaga Milk Industry (TSE:2264) has completed its latest share buyback tranche, repurchasing 2,463,700 shares, or 2.98% of outstanding stock, for ¥8,282.97 million under the program announced in May 2025.

See our latest analysis for Morinaga Milk Industry.

The buyback update comes after a solid run in the shares, with a 90-day share price return of 10.95% and a 1-year total shareholder return of 33.75%. The latest ¥3,758 close also reflects momentum supported by recent capital returns.

If this capital return story has caught your eye, it could be a good moment to broaden your watchlist with fast growing stocks with high insider ownership.

With a 1 year total return of 33.75%, annual revenue of ¥563,904 and net income of ¥10,387, plus an indicated 38% intrinsic discount, is Morinaga Milk still undervalued, or is the market already pricing in future growth?

Price-to-Earnings of 29.6x: Is it justified?

Morinaga Milk is trading on a P/E of 29.6x, a level that sits well above several reference points in the data provided.

The P/E ratio compares the current share price with earnings per share, so for a company like Morinaga Milk it reflects what investors are currently paying for each unit of reported profit.

In this case, the P/E of 29.6x is described as expensive compared with the estimated fair P/E of 22.8x, the Japan Food industry average of 16.5x, and a peer average of 25.1x. This suggests that the market is attaching a richer price tag to Morinaga Milk’s earnings than both its sector and closer peers, and also above the level our fair ratio work suggests the market could move toward if pricing became more in line with those fundamentals.

The premium to the industry and to the fair P/E level is strong, which means the shares are priced materially higher than both sector norms and the modelled fair ratio.

Explore the SWS fair ratio for Morinaga Milk Industry

Result: Price-to-Earnings of 29.6x (OVERVALUED)

However, you still need to weigh up risks such as a relatively rich 29.6x P/E, as well as any future shifts in demand across its broad dairy product range.

Find out about the key risks to this Morinaga Milk Industry narrative.

Another View: DCF Signals Undervaluation

While the 29.6x P/E looks rich, our DCF model points the other way, with Morinaga Milk trading at ¥3,758 against an estimated fair value of ¥6,096.09, or about a 38.4% discount. If earnings forecasts hold, this gap could reflect mispricing rather than excess optimism.

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

2264 Discounted Cash Flow as at Jan 2026
2264 Discounted Cash Flow as at Jan 2026

Simply Wall St performs a discounted cash flow (DCF) on every stock in the world every day (check out Morinaga Milk Industry 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 876 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 Morinaga Milk Industry Narrative

If you see the numbers differently or want to stress test your own view against this data, you can build a fresh narrative in just a few minutes: Do it your way.

A great starting point for your Morinaga Milk Industry research is our analysis highlighting 2 key rewards and 2 important warning signs that could impact your investment decision.

Looking for more investment ideas?

If Morinaga Milk has sparked your interest, do not stop here. Broaden your options and let a few focused stock lists sharpen where you look next.

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.