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TOTO (TSE:5332) has been drawing attention after its recent share performance, with returns over the month and past 3 months outpacing its longer term 5 year record and prompting fresh interest in its plumbing fixtures business.

See our latest analysis for TOTO.

With the share price at ¥4,724 and a 30 day share price return of 11.60% feeding into a 7.71% year to date gain, recent momentum contrasts with a weaker 5 year total shareholder return of a 12.53% decline. This hints that sentiment around TOTO’s prospects has shifted more positively in the nearer term.

If this kind of renewed interest in established industrial names has your attention, it could be a good moment to see what else is moving through fast growing stocks with high insider ownership.

With the stock at ¥4,724, a value score of 1 and trading above an average analyst price target of ¥4,309, the key question is whether TOTO is still undervalued or if the market is already pricing in future growth.

TOTO is trading on a P/S of 1.1x, which sits above both its peer group and the broader Japan building industry despite the recent share price recovery.

The P/S ratio compares the company’s market value with its annual revenue, so it tells you how much investors are paying for each ¥ of sales in TOTO’s plumbing fixtures and related products business.

In TOTO’s case, the current 1.1x P/S is described as expensive compared to both the peer average of 1x and the Japan building industry average of 0.6x. At the same time, that 1.1x level is flagged as good value against an estimated fair P/S of 1.6x, a level the market could move toward if sentiment and fundamentals stay aligned.

Relative to the sector, the current P/S suggests investors are already paying a premium versus many building names, even though TOTO’s earnings profile has recently included a large one off loss and low return on equity.

Explore the SWS fair ratio for TOTO

Result: Price-to-Sales of 1.1x (ABOUT RIGHT)

However, you still need to weigh risks like TOTO’s recent large one off loss and low return on equity, which could potentially limit how much investors are willing to pay.

Find out about the key risks to this TOTO narrative.

While the 1.1x P/S ratio looks roughly in line with a fair ratio of 1.6x, our DCF model points in a different direction. On that basis, TOTO at ¥4,724 is described as trading above an estimated fair value of ¥3,460.5, which suggests less room for error if expectations slip.

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 TOTO 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 100+ 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 prefer to lean on your own work, you can shape a fresh view in just a few minutes: Do it your way.

A great starting point for your TOTO research is our analysis highlighting 1 key reward and 3 important warning signs that could impact your investment decision.

If TOTO has sharpened your focus, do not stop here. The Screener can quickly surface other angles that might suit your watchlist and research style.

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 5332.T.

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