Hyakujushi Bank (TSE:8386) revealed a new share buyback program alongside an upward revision to its full-year business forecasts. These developments give investors fresh reasons to review the stock. The moves are aimed at achieving stronger shareholder returns and improved capital efficiency.
See our latest analysis for Hyakujushi Bank.
Hyakujushi Bank’s shares have surged recently, climbing 13.7% over the past month and notching a 6.1% return in just the past week. The renewed buyback and improved business outlook appear to be fueling momentum. This has helped the bank achieve a remarkable 122% total shareholder return over the past year and an even more impressive 310% over five years.
If the combination of buybacks and business upgrades has you thinking about broader opportunities, now’s a great time to hunt for fast growing stocks with high insider ownership.
But after such a strong run and major shareholder-friendly moves, is there still upside potential left for Hyakujushi Bank? Or is all the growth already reflected in the share price?
Hyakujushi Bank’s current price-to-earnings (P/E) ratio of 11.6x puts it below the broader Japanese market average, suggesting the stock is priced more attractively than many peers. With the last close at ¥5,730, this multiple reflects how much investors are willing to pay for each yen of the bank’s earnings.
The P/E ratio measures investor expectations of a company’s future profitability versus its current performance. In the case of banks, it also reflects how the market values their growth prospects and risk profile. Since Hyakujushi Bank has posted solid earnings growth in recent years, this below-market P/E suggests the market is cautious or not fully recognizing recent momentum.
Compared to the Japanese banks industry average P/E of 11.6x, Hyakujushi Bank’s valuation is almost identical, indicating the market views its future prospects as in line with sector peers. However, against the wider Japanese market P/E of 14.3x, Hyakujushi Bank appears more attractively valued for investors seeking relative bargains in the sector.
See what the numbers say about this price — find out in our valuation breakdown.
Result: Price-to-Earnings of 11.6x (ABOUT RIGHT)
However, risks remain if market sentiment shifts or if earnings growth slows. These factors could quickly temper the current momentum in Hyakujushi Bank’s shares.
Find out about the key risks to this Hyakujushi Bank narrative.
While the price-to-earnings ratio presents Hyakujushi Bank as attractively valued, our SWS DCF model offers a different perspective. Based on discounted cash flow, the bank’s shares are trading above our estimated fair value of ¥5,353, which suggests the current price might be somewhat inflated in terms of long-term cash flows. Should investors be cautious about buying after such a strong run?
