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Mazda Motor (TSE:7261) Could Be 24% Below Fair Value After Profit Return

Simply Wall St · 1d ago

Mazda Motor (TSE:7261) is back in focus after reporting first quarter results to June 30, 2026, that showed a return to profit and updated full year sales and earnings guidance.

See our latest analysis for Mazda Motor.

The latest results arrive after a mixed stretch for Mazda Motor’s stock, with the 90 day share price return of 10.70% contrasting with a year to date share price decline of 6.14%. The 1 year total shareholder return of 26.34% points to stronger gains for investors who stayed invested over a longer period.

If this earnings update has you looking beyond autos, it can be a useful moment to scan other areas of the market such as 11 top founder-led companies

Mazda Motor has swung back into profit and the stock has moved higher over the past quarter. The business looks stronger on recent numbers. The next question is whether the current share price already reflects that.

Price to earnings of 6.9x for Mazda Motor: Is it justified?

On recent figures Mazda Motor trades on a P/E of 6.9x, which screens as good value compared both to peers at 20.7x and the wider Asian auto industry at 13.7x.

The P/E ratio compares the current share price with earnings per share and gives a quick read on how much investors are paying for each unit of profit. For a mature auto manufacturer like Mazda Motor, P/E often reflects expectations around earnings stability, product cycles and exposure to regional demand.

Here the market price implies a much lower earnings multiple than both peers and the sector, while Mazda Motor has returned to profit and earnings over the past year rose very sharply. At the same time, the SWS DCF model estimates a future cash flow value of ¥1,527.66 per share versus the last close of ¥1,169, which suggests that if earnings and cash flows track those inputs, the P/E ratio could move closer to levels implied by the model over time.

Compared with the Asian auto industry average P/E of 13.7x and an estimated fair P/E of 14.3x, Mazda Motor’s current 6.9x looks materially lower and points to a possible valuation gap if the market were to reassess its earnings profile.

Explore the SWS fair ratio for Mazda Motor

Result: Price-to-earnings of 6.9x (UNDERVALUED)

However, there are still risks that could challenge this view, including any reversal in recent earnings momentum or weaker demand in key markets such as North America.

Find out about the key risks to this Mazda Motor narrative.

Another view on Mazda Motor’s value

The P/E ratio paints Mazda Motor as attractively priced, but the SWS DCF model adds a different angle. On that model, the share price of ¥1,169 sits about 23.5% below an estimated future cash flow value of ¥1,527.66. Both signals point to value, but the durability of that value is uncertain.

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

7261 Discounted Cash Flow as at Aug 2026
7261 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 Mazda Motor 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 24 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

The picture on Mazda Motor is mixed, with both risks and rewards in play, so it makes sense to review the details and move quickly to shape your own view by weighing the 4 key rewards and 2 important warning signs

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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.