ASICS (TSE:7936) has seen its stock shift in recent trading sessions, drawing attention from investors curious about evolving trends. Looking at recent price moves, the shares have tracked a modest range this month with slight downward pressure.
See our latest analysis for ASICS.
Stepping back, ASICS has delivered standout long-term results, with a total shareholder return of 25.4% over the last year and an astonishing 415.75% in the past three years. While the last few months saw some mild share price weakness, the bigger picture still points to sustained momentum and renewed interest from investors looking for growth in consumer brands.
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With shares still trading at a notable discount to analyst targets and robust fundamentals in play, the key question is whether ASICS remains undervalued or if the market has already accounted for its next stage of growth.
ASICS currently trades at a price-to-earnings (PE) ratio of 31.5x, far above both its peer average and the luxury sector as a whole. This raises questions about whether such a premium is warranted for the brand’s earnings outlook.
The price-to-earnings ratio measures how much investors are paying for each unit of profit. In consumer brands like ASICS, this multiple often reflects not just present profitability but also expectations for future growth and brand strength.
Despite strong recent earnings growth and a robust return on equity, this 31.5x multiple is more than double the industry average of 14.9x and also well above our estimated fair ratio of 23.1x. The current valuation suggests that the market is highly optimistic about future performance, potentially pricing in ambitious targets for sustained growth and profitability. If expectations fade, the multiple could contract significantly to better align with peers or its intrinsic potential.
Explore the SWS fair ratio for ASICS
Result: Price-to-Earnings of 31.5x (OVERVALUED)
However, slowing revenue growth and a potential pullback from recent highs could expose the stock to volatility if market sentiment shifts.
Find out about the key risks to this ASICS narrative.
Taking a different approach, our SWS DCF model estimates ASICS to be overvalued, with shares trading above the model’s calculated fair value of ¥3,286. While multiples suggest high optimism, the DCF model indicates that future cash flows may not fully support the current market price. Could analyst optimism be running ahead of fundamentals?