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YONEX (TSE:7906) has quietly turned into a strong long term winner, with the stock up roughly 54% over the past year and nearly tripling investors’ money over the past 3 years.

See our latest analysis for YONEX.

The latest 1 day share price return of 2.97 percent, to ¥3,290, suggests buyers are stepping back in after a 30 day share price pullback. Momentum also appears broadly positive given the 1 year total shareholder return above 50 percent.

If YONEX has you rethinking growth potential, this could be a good moment to scan the market for other stories using our screener for fast growing stocks with high insider ownership.

Yet with earnings still growing at a double digit clip, an intrinsic value estimate suggesting roughly 25 percent upside, and shares trading just below analyst targets, is YONEX a mispriced compounder, or is the market already assuming years of strong growth?

On a trailing price to earnings basis, YONEX trades at 24.4 times earnings, which screens as expensive against both its peers and its own fair ratio.

The price to earnings multiple compares the current share price to per share earnings. It is a quick way to gauge how much investors are paying for each unit of profit in a consumer durables name like YONEX.

In YONEX’s case, investors are paying a substantial premium, with the current 24.4 times earnings multiple sitting well above the estimated fair price to earnings level of 17.8 times that our models suggest could be a more sustainable anchor point over time.

The same pattern shows up in peer comparisons. YONEX’s 24.4 times earnings valuation stands markedly above both the broader JP Leisure industry average of 13.8 times and a narrower peer set at 12.5 times. This underscores how aggressively the market is pricing in future growth.

Explore the SWS fair ratio for YONEX

Result: Price-to-Earnings of 24.4x (OVERVALUED)

However, investors still face risks, including potential multiple compression if growth slows and sensitivity to any downturn in discretionary consumer spending on sports equipment.

Find out about the key risks to this YONEX narrative.

While the current 24.4 times earnings multiple looks stretched, our DCF model points the other way, with YONEX trading about 24 percent below an estimated fair value of roughly ¥4,353. In plain terms, are investors overpaying on earnings or underestimating long term cash flows?

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

Simply Wall St performs a discounted cash flow (DCF) on every stock in the world every day (check out YONEX 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 901 undervalued stocks based on their cash flows. If you save a screener we even alert you when new companies match – so you never miss a potential opportunity.

If you see the story differently or want to dig into the numbers yourself, you can build a personalized view in just minutes: Do it your way.

A good starting point is our analysis highlighting 3 key rewards investors are optimistic about regarding YONEX.

Do not stop at one opportunity. Use the Simply Wall Street Screener to uncover data backed ideas that others will only notice once prices have already moved.

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.

Companies discussed in this article include 7906.T.

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