NTN (TSE:6472) Posted Strong First Quarter Results, Is The Stock Undervalued?

How NTN (TSE:6472) earnings set the tone for investors

NTN (TSE:6472) drew investor attention after reporting first quarter 2026 results, with sales of ¥212,279 million, net income of ¥1,928 million, and basic earnings per share of ¥3.24 from continuing operations.

See our latest analysis for NTN.

The latest quarterly results appear to have kept interest in NTN steady, with the current share price at ¥392.1 and a year to date share price return of 5.52%. The 1 year total shareholder return of 28.49% points to stronger longer term momentum, despite a 90 day share price return that is down 7.13%.

If NTN's recent move has you thinking about where else growth or recovery stories might appear in industrial and electrification supply chains, you may want to scan opportunities in 37 power grid technology and infrastructure stocks

Bulls see NTN as a solid industrial supplier at a reasonable price, while bears focus on recent share price softness and execution risks across regions. Which case does the current valuation actually support next?

Preferred P/E of 17.1x for NTN: Is it justified?

On the latest figures, NTN trades on a P/E of 17.1x, while the shares last closed at ¥392.1. That puts the stock on a richer earnings multiple than both the JP Machinery industry average of 13.4x and the identified peer average of 14x, even though it is flagged as trading at a 38.6% discount to an estimated fair value based on future cash flows.

The P/E ratio compares the current share price with earnings per share. For an industrial supplier like NTN, it is one quick way to see how much investors are paying for each unit of current earnings. A higher P/E can signal that the market is comfortable paying more for forecast earnings growth or for a business mix that investors view as relatively attractive.

Here, the market is assigning NTN a higher P/E than both the industry and peer averages. This suggests expectations for future earnings are stronger than for many domestic machinery companies. At the same time, the fair value P/E estimate of 23.7x from the SWS fair ratio framework is materially above the current 17.1x. This indicates the current market valuation sits below the level that model implies the stock could move toward if its assumptions play out.

Explore the SWS fair ratio for NTN.

Result: Price-to-earnings of 17.1x (UNDERVALUED)

However, the recent 7.13% three month share price decline and the 38.6% intrinsic discount estimate could both shift if NTN earnings or cash flow assumptions weaken.

Find out about the key risks to this NTN narrative.

Another view on NTN using the SWS DCF model

While the P/E of 17.1x makes NTN look inexpensive against its own fair ratio of 23.7x, the SWS DCF model provides an additional perspective. It places fair value at ¥639.05 per share, compared with the current ¥392.1, which indicates a potential valuation gap for investors to consider.

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 NTN 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 18 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

The mix of potential rewards and flagged risks around NTN may feel finely balanced. It can help to review the underlying figures yourself and move quickly while the information is fresh, then weigh up the 3 key rewards and 4 important warning signs.

Looking for more investment ideas beyond NTN?

If NTN has sharpened your focus on valuations, now is the time to widen your watchlist before other investors move first on quality opportunities.

• Spot potential bargains early by scanning screener containing 63 high quality undiscovered gems that combine strong fundamentals with relatively low market attention.
• Strengthen your downside protection by reviewing 56 resilient stocks with low risk scores that score well on resilience and financial stability.
• Prioritize financial strength by checking companies in the solid balance sheet and fundamentals stocks screener (40 results) that pair sound balance sheets with consistent fundamentals.

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.

Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team@simplywallst.com