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Daikin IndustriesLtd (TSE:6367) Could Be 30% Undervalued After Strong Q1 Sales

Simply Wall St · 2d ago

Daikin IndustriesLtd (TSE:6367) reported first quarter results that paired higher sales with essentially flat earnings. The update gives investors fresh detail on revenue trends, profitability and recent bond issuance activity.

See our latest analysis for Daikin IndustriesLtd.

After the earnings release and recent ¥80b in unsecured bond issuance, Daikin Industries Ltd’s share price sits at ¥23,765, with a year to date share price return of 17.36% and a 1 year total shareholder return of 30.72%, while the 3 year total shareholder return has declined 11.69%.

If Daikin’s latest results have you thinking about where else growth and income stories might emerge, this is a good moment to scan 36 power grid technology and infrastructure stocks

After a strong run and solid revenue growth from Daikin IndustriesLtd, the share price now sits close to some intrinsic estimates, yet still at a discount to analyst targets. Investors may wish to consider how much potential upside might remain in the current valuation.

Preferred P/E of 24x: Is it justified for Daikin IndustriesLtd?

Based on the latest data, Daikin IndustriesLtd trades on a P/E of 24x, which sits above both its industry and peer averages. For you as an investor, that means the market is pricing in stronger earnings power than many comparable companies.

The P/E ratio compares the current share price with earnings per share. For a business like Daikin IndustriesLtd, which reports high quality earnings and is forecast to grow profits, this measure gives a quick read on how much investors are willing to pay for each unit of earnings.

Daikin IndustriesLtd’s P/E of 24x is described as expensive against the JP Building industry average of 12.5x and the peer average of 18.2x. The gap suggests the market is assigning a premium for its earnings profile, even though recent earnings growth of 4% over the past year trails both the industry growth rate of 12.7% and the company’s own 5 year earnings growth of 7.4% per year. At the same time, the ratio is close to the estimated fair P/E of 25.6x, which points to a level the market could reasonably move toward if earnings forecasts are met.

Explore the SWS fair ratio for Daikin IndustriesLtd

Result: Price-to-Earnings of 24x (OVERVALUED)

However, Daikin IndustriesLtd still faces risks if earnings growth slows relative to its 24x P/E, or if global air conditioning demand weakens in key regions.

Find out about the key risks to this Daikin IndustriesLtd narrative.

Another view on Daikin IndustriesLtd’s value

The P/E of 24x makes Daikin IndustriesLtd look expensive, yet the SWS DCF model points the other way. With the current share price at ¥23,765 and a DCF value of ¥30,851.79, the stock screens as undervalued. Which signal do you think deserves more weight right now?

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

6367 Discounted Cash Flow as at Aug 2026
6367 Discounted Cash Flow as at Aug 2026

Simply Wall St performs a discounted cash flow (DCF) on every stock in the world every day (check out Daikin IndustriesLtd 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 19 high quality undervalued stocks. If you save a screener we even alert you when new companies match - so you never miss a potential opportunity.

Next Steps

Given the mix of signals around Daikin IndustriesLtd, it makes sense to look through the numbers yourself and decide how convincing the story feels. To see what is currently driving optimism around the stock, review the 3 key rewards.

Looking for more investment ideas beyond Daikin IndustriesLtd?

If Daikin IndustriesLtd has sharpened your focus, do not stop here. A broader watchlist can help you spot fresh opportunities before the crowd moves.

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.