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Komatsu (TSE:6301) Valuation Check After Recent Share Price Move And 40% Undervaluation Narrative

Simply Wall St · 3d ago

Komatsu (TSE:6301) is back on the radar after a recent share price move, with the stock closing at ¥5,127. For investors, that shift invites a closer look at returns and current valuation signals.

See our latest analysis for Komatsu.

That latest move comes after a mixed few months for the share price, with a 1-day share price return of 0.54% decline, a 7-day gain of 2.54% and a 90-day share price return of 3.72% decline. Longer term, total shareholder returns of 26.95% over 1 year and more than 2x over 5 years suggest underlying momentum has been stronger for patient investors.

If Komatsu has caught your eye, this can be a good moment to widen your watchlist and scan for opportunities among aerospace and defense stocks as another part of the capital goods space.

So with Komatsu trading around ¥5,127, a price target that sits close by and an intrinsic value estimate suggesting a possible discount, is there still a buying opportunity here or is the market already pricing in future growth?

Most Popular Narrative Narrative: 40% Undervalued

Komatsu's most followed narrative points to a fair value of ¥5,150 against a last close of ¥5,127, putting a small spotlight on the gap between price and modelled worth.

Analysts expect earnings to reach ¥444.3 billion (and earnings per share of ¥502.62) by about September 2028, up from ¥420.7 billion today. However, there is a considerable amount of disagreement amongst the analysts with the most bullish expecting ¥497.5 billion in earnings, and the most bearish expecting ¥390.0 billion.

Read the complete narrative.

Curious how modest revenue growth, slightly softer margins and a higher future P/E still support a higher fair value? The narrative stitches these assumptions together using a 7.09% discount rate and a detailed earnings path that may surprise you.

Result: Fair Value of ¥5,150 (UNDERVALUED)

Have a read of the narrative in full and understand what's behind the forecasts.

However, you should keep an eye on demand softness in core equipment segments and high inventory levels, which could pressure margins if sales do not stabilise.

Find out about the key risks to this Komatsu narrative.

Build Your Own Komatsu Narrative

If you look at the numbers and reach a different conclusion, or simply prefer testing your own assumptions, you can build a custom view in just a few minutes, starting with Do it your way.

A great starting point for your Komatsu research is our analysis highlighting 4 key rewards and 1 important warning sign that could impact your investment decision.

Looking for more investment ideas?

If Komatsu is on your list, do not stop there. A broader set of ideas can give you more context and potentially sharper choices.

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.