Is Asahi Group a Bargain After Global Expansion Drives 14% Share Price Rally?
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Wondering if Asahi Group Holdings is a hidden gem or already fully valued? You’re in the right place to find out how much the shares could really be worth.
The stock has been on a steady climb, gaining 2.5% in the last week, 8.0% over the past month, and it is up 14.4% in the last year.
Recent news highlights Asahi’s strategic focus on global expansion and investments in premium beverage segments, which has caught the market’s attention. This context helps explain the upward momentum seen in the share price lately.
On our valuation checks, Asahi scores a perfect 6 out of 6, suggesting it may be undervalued by multiple key measures. Let’s break down the main ways to value the stock and look out for an even more insightful approach at the end of this article.
A Discounted Cash Flow (DCF) model estimates what a company is truly worth by projecting its future cash flows and discounting them back to today’s value. This reflects the time value of money. This method is often considered one of the most thorough ways to value a business.
For Asahi Group Holdings, the most recent reported Free Cash Flow is approximately ¥173 billion. Analysts expect annual Free Cash Flow to grow steadily, reaching ¥270.5 billion by 2029. These short-term projections are further extended with cautious growth estimates, relying on both analyst consensus for the first five years and systematic extrapolation for subsequent years.
In this two-stage model, all cash flows are converted into today’s value and summed to estimate the business’s total intrinsic worth. This results in an estimated fair value of ¥4,617 per share.
With the current share price trading at a 61.2% discount to this intrinsic valuation, the DCF analysis indicates Asahi Group Holdings stock may be substantially undervalued by the market.
The Price-to-Earnings (PE) ratio is a widely used valuation metric for profitable companies like Asahi Group Holdings, as it directly relates a company’s share price to its per-share earnings. For businesses generating steady profits, the PE ratio can provide a clear snapshot of what investors are willing to pay for each unit of earnings.
It’s important to note that a “normal” or “fair” PE ratio will differ between companies, as it reflects not just current profitability but also growth expectations and risk. A higher PE often indicates that investors expect above-average growth or perceive the business to be lower risk. A lower PE could signal slower growth or higher perceived risk.
Currently, Asahi Group Holdings trades at a PE ratio of 15.3x. This is below the Beverage industry average of 18.0x and even further below peers, which average 34.3x. At first glance, this suggests Asahi may be undervalued versus other companies in its sector.
However, Simply Wall St goes a step further with its proprietary Fair Ratio metric, which determines what the company’s PE ratio should be after factoring in unique features like its earnings growth prospects, profitability, market cap, and industry risks. Unlike simple industry or peer comparisons, the Fair Ratio offers a more tailored valuation benchmark, recognizing the specifics that affect Asahi’s intrinsic value.
For Asahi Group Holdings, the Fair Ratio stands at 24.4x. Because this is meaningfully higher than the company’s actual ratio of 15.3x, the stock appears undervalued on a PE basis according to this more insightful measure.
Earlier we mentioned that there is an even better way to understand valuation. Let’s introduce you to Narratives. A Narrative is simply your story about a company, the perspective you bring by linking assumptions about Asahi’s future growth and profitability to financial forecasts and, ultimately, to a calculated fair value. This approach goes beyond static numbers and helps you articulate why you think the company is worth more or less than its current price.
Narratives are an accessible, interactive tool available on Simply Wall St’s Community page, where millions of investors create and compare their own views on companies. By building a Narrative, you can see how changes in revenue growth, margins, or industry outlook might affect fair value. This enables you to confidently decide whether it is time to buy, hold, or sell shares based on your outlook versus the latest price. As new data like earnings or news emerges, Narratives update dynamically to ensure your analysis always reflects the latest information.
For example, one investor’s Narrative for Asahi Group Holdings projects rapid global expansion with a fair value significantly above today’s price. Another investor might expect modest domestic growth, resulting in a much lower valuation. Narratives let you compare and understand these perspectives in real time.
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 2502.T.
Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team@simplywallst.com
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