Revisiting Daiwa Securities Living Investment (TSE:8986)’s Valuation After Upgraded 2026 Earnings and Distribution Forecasts

Daiwa Securities Living Investment (TSE:8986) just lifted its March 2026 earnings and distribution forecasts, citing stronger than expected gains from property sales, portfolio reshuffling, and new rental housing acquisitions.

See our latest analysis for Daiwa Securities Living Investment.

The upbeat revision comes on top of an already solid run, with a year to date share price return of 27.19 percent and a 1 year total shareholder return of 36.41 percent. This suggests momentum is still building rather than fading.

If this kind of improving outlook has your attention, it could be a good moment to broaden your search and explore fast growing stocks with high insider ownership.

With the units now trading just shy of analyst targets but still screening as significantly undervalued on intrinsic metrics, is Daiwa Securities Living Investment offering mispriced upside, or are investors already paying up for its future growth?

Price-to-Earnings of 19.8x: Is it justified?

On a trailing Price to Earnings ratio of 19.8 times, Daiwa Securities Living Investment trades at a discount to both domestic and global residential REIT peers, despite its recent strong unit price performance and sizeable discount to intrinsic value estimates.

The Price to Earnings ratio compares the current unit price to the REIT's earnings per unit, making it a straightforward way to gauge how much investors are paying today for each yen of current profit. For a mature, income focused residential and healthcare REIT, it is a widely used yardstick for weighing up income stability and growth expectations against what the market is currently pricing in.

Here, the market is assigning Daiwa Securities Living Investment a 19.8 times multiple. This sits below the peer average of 26.9 times and even edges under the broader global residential REIT average of 20.1 times, suggesting investors are not fully pricing in its higher recent earnings growth and improved margins. Relative to an estimated fair Price to Earnings ratio of 23 times that our models point to as a level the market could migrate toward, the current discount reinforces the picture of a REIT that may still have valuation catch up potential if its operational performance and distributions hold up.

Explore the SWS fair ratio for Daiwa Securities Living Investment

Result: Price-to-Earnings of 19.8x (UNDERVALUED)

However, investors should watch for continued revenue and net income declines, as well as the risk that analyst price targets prove too optimistic if operating conditions soften.

Find out about the key risks to this Daiwa Securities Living Investment narrative.

Another View: What Our DCF Says

While the 19.8 times earnings multiple hints at a modest discount, our DCF model is far more aggressive. It points to a fair value near ¥289,782, around 60 percent above the current ¥114,600 price. Is the market overlooking long term cash flows, or is the model too optimistic?

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 Daiwa Securities Living Investment 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.

Build Your Own Daiwa Securities Living Investment Narrative

If you would rather interrogate the numbers yourself and challenge these assumptions, you can build a personalised view of Daiwa Securities Living Investment in minutes, Do it your way.

A great starting point for your Daiwa Securities Living Investment research is our analysis highlighting 4 key rewards and 2 important warning signs that could impact your investment decision.

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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.

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