Konica Minolta (TSE:4902) Could Be 41% Undervalued After Q1 Earnings

How Konica Minolta’s Q1 earnings set the tone for investors

Konica Minolta (TSE:4902) recently released first quarter results that showed year-on-year improvements in sales, net income and earnings per share. These earnings are a key reference point for investors assessing the stock.

See our latest analysis for Konica Minolta.

Konica Minolta’s Q1 earnings release on 30 July has arrived after a mixed share price run, with the stock at ¥595.5 and a recent 7 day share price return that declined 12.73%. However, the 90 day share price return is up 17.97% and the 1 year total shareholder return is 24.61%, which points to momentum that has cooled in the short term.

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Konica Minolta’s latest quarter shows a business that is holding its ground while the share price has cooled after a strong year. Do those earnings and the current ¥595.5 level still line up well for value seekers?

Price to earnings of 9x for Konica Minolta, is it justified?

Konica Minolta is trading on a P/E of 9x at a last close of ¥595.5, which screens as inexpensive compared both to peers and to a fair value estimate.

The P/E ratio compares the company’s share price to its earnings per share. For Konica Minolta, this multiple effectively shows how much investors are paying today for each unit of current earnings.

According to Simply Wall St’s checks, the stock is considered good value with a P/E of 9x compared with a peer average of 20.9x and an Asian tech sector average P/E of 19.6x. It also sits well below an estimated fair P/E of 15.4x. This indicates that the current market pricing is materially lower than the level the model suggests could be justified if sentiment and fundamentals were aligned with that fair ratio.

Explore the SWS fair ratio for Konica Minolta

Result: Price-to-earnings of 9x (UNDERVALUED)

However, Konica Minolta still faces risks if revenue, which currently sits around ¥1.10b, stalls further or if demand for digital workplace and print solutions weakens.

Find out about the key risks to this Konica Minolta narrative.

Another view on Konica Minolta’s valuation

Alongside the P/E check, Simply Wall St’s DCF model values Konica Minolta’s future cash flows at ¥1,008.14 per share. With the stock at ¥595.5, that implies a sizeable gap that the market has not closed. Is this a genuine opportunity or a sign of caution from investors?

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 Konica Minolta 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 19 high quality undervalued stocks. If you save a screener we even alert you when new companies match - so you never miss a potential opportunity.

Next Steps

With mixed signals across Konica Minolta’s valuation and recent share price moves, now is a good time to review the data directly and decide how it fits your goals. To weigh both the potential upsides and the areas of concern, start by reviewing the 3 key rewards and 2 important warning signs

Looking for more investment ideas beyond Konica Minolta?

If Konica Minolta has your attention, do not stop there. Broadening your watchlist with other clear opportunities can help you spot ideas you might otherwise miss.

• Target dependable income streams by reviewing 46 dividend fortresses that could appeal if you want yield alongside more established business profiles.
• Hunt for quality at a sensible price through the 19 high quality undervalued stocks that highlight companies combining fundamentals with more modest valuations.
• Strengthen your downside protection by scanning the 59 resilient stocks with low risk scores which focuses on businesses with more resilient overall risk profiles.

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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