NEC (TSE:6701) Could Be 19% Below Fair Value Following First Quarter Results

First quarter earnings and updated guidance at NEC stock

NEC (TSE:6701) has come into focus after reporting first quarter results for the period ended June 30, 2026, alongside updated full year revenue guidance through March 31, 2027, giving investors fresh financial reference points.

See our latest analysis for NEC.

NEC's latest earnings update has arrived alongside a share price that has risen 10.85% over the past month and 15.76% over the past quarter, while the year to date share price return is still down 10.53%. Over longer periods, total shareholder return of 6.04% over one year and very strong 3 year and 5 year total shareholder returns suggest the broader story has been positive even though shorter term momentum has been mixed.

If NEC's recent move has you thinking about other opportunities linked to digital infrastructure and automation, this could be a useful moment to scan 37 robotics and automation stocks.

Bulls will point to NEC's strong first quarter figures and long term total returns. Bears will focus on the recent share price rebound and updated revenue outlook. Which side does the current valuation evidence support next?

Most Popular Narrative: 19.1% Undervalued

Compared with NEC's last close at ¥4,862, the most followed narrative sets a fair value of ¥6,007.5, pointing to meaningful upside in its long term story.

Ongoing digital transformation initiatives across both public and private sectors are driving strong order intake and double digit revenue growth for NEC's high margin BluStellar unit, which is expected to lead to sustained revenue expansion and margin improvement. Increased demand for advanced IT infrastructure (including AI, cybersecurity, and public safety platforms) from government and municipal projects is supporting robust bookings and revenue, especially as smart city and urban modernization contracts ramp up.

Read the complete narrative.

Curious what sits behind that fair value for NEC. The narrative leans heavily on steady revenue expansion, fatter margins and a richer future earnings multiple. The exact growth path, profit level and required P/E are all mapped out. The numbers are bolder than the current market price suggests.

Result: Fair Value of ¥6,007.5 (UNDERVALUED)

Have a read of the narrative in full and understand what's behind the forecasts.

However, there are still clear risks to the NEC story, including pressure on telecom services and higher investment needs that could weigh on revenue and margins.

Find out about the key risks to this NEC narrative.

Another view on NEC using cash flows

The earlier fair value for NEC is built around analyst earnings forecasts and a future P/E of 26.9x. A separate check using the SWS DCF model gives a value of ¥4,476.39 per share, which sits below the current price of ¥4,862. That indicates NEC is trading above this cash flow estimate.

That gap reflects different assumptions about how much of NEC's future earnings are already priced in. It leaves you with a simple question: Do you place more weight on the upbeat earnings narrative or on the more cautious cash flow view from the SWS DCF model?

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 NEC 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 balance of views on NEC is mixed, which is exactly why the data matters most for you. Take a closer look at what is driving optimism by reviewing the 3 key rewards

Looking for more investment ideas beyond NEC?

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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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