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Tsumura (TSE:4540) Looks Cheap After FTSE All World Index Removal

Simply Wall St · 1d ago

Tsumura (TSE:4540) was removed from the FTSE All-World Index (USD) on 19 September 2026, an index change that can prompt mechanical buying and selling by funds that track the benchmark.

Recent trading shows Tsumura’s momentum cooling, with the share price down 5.99% year to date, despite a 4.00% 90 day share price return and a 1 year total shareholder return of 8.94%. However, the 3 year total shareholder return of 51.52% points to a much stronger longer run for investors.

Scan how other Japan-listed healthcare stocks with resilient balance sheets are handling similar index shifts by reviewing the hand picked list of solid balance sheet and fundamentals (22 results) alongside Tsumura.

Tsumura now trades at a double digit discount to both analyst targets and an estimated fair value, even after the index related shakeout. Is that a safety margin, or a warning sign that the market is right to be cautious?

Price-to-Earnings of 9.5x: Is it justified?

Tsumura trades on a P/E of 9.5x, while the last close was ¥3,878 and the share price sits below both analyst targets and an estimated fair value.

The P/E ratio compares what investors are willing to pay today for each unit of current earnings. For a pharmaceuticals business like Tsumura, that matters because earnings often reflect a mix of mature products and investment in future treatments.

A 9.5x multiple is well below the JP Pharmaceuticals industry average of 14.4x and also below a peer average of 15.4x. That gap suggests the market is pricing Tsumura’s earnings more cautiously than both sector and peer benchmarks. The estimated fair P/E of 16.1x is a reference point for where the valuation could move if sentiment or performance aligns with that view.

The discount is also highlighted by the SWS DCF model, which puts the future cash flow value around ¥4,467. This is about 13.4% above the current share price and indicates the stock is trading at a meaningful gap to that estimate.

Explore the SWS fair ratio for Tsumura.

Result: Price-to-Earnings of 9.5x (UNDERVALUED)

Still, Tsumura’s story could change quickly if revenue growth of 5.90% slows or if flat net income trends turn into sustained earnings pressure.

Find out about the key risks to this Tsumura narrative.

Another View on Tsumura’s Value

The SWS DCF model also points to Tsumura trading below an estimated future cash flow value of ¥4,467 per share, compared with the current ¥3,878 level. That gap suggests the market price could be lagging the model. Or is the model too optimistic about future cash generation?

Investors who want to see how this cash flow view is built can walk through the full calculation with the SWS model here, then judge how it lines up with their own expectations for Tsumura. Look into how the SWS DCF model arrives at its fair value.

4540 Discounted Cash Flow as at Sep 2026
4540 Discounted Cash Flow as at Sep 2026

Simply Wall St performs a discounted cash flow (DCF) on every stock in the world every day (check out Tsumura 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 18 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

Curious whether Tsumura’s discount reflects hidden strength or risk that is still being priced in? Act quickly, review the numbers, and weigh both sides of the story by checking the 3 key rewards and 2 important warning signs.

Looking for more investment ideas beyond Tsumura?

If Tsumura has you thinking about valuation, do not stop here. Broaden your watchlist and give yourself more options before the next move hits.

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.