Round One (TSE:4680) Left The FTSE All World Index, Is The Discount Too Wide?

Round One (TSE:4680) was recently dropped from the FTSE All-World Index (USD) on 19 September 2026. This change can prompt mechanical selling by index-linked funds and reshape how traders view the stock’s liquidity profile.

Round One’s share price sits at ¥1,187.5, with a 1-month share price return down 10% and a modest 4.95% share price gain year to date. The 3-year total shareholder return of 121.93% and 5-year total shareholder return of 154.93% point to longer term momentum that has been far stronger than the recent pullback around the index removal news.

Scan how other leisure and consumer-facing stocks are reacting to similar index changes by reviewing the hand picked 74 high quality undiscovered gems that may be flying under most radars.

Bulls see Round One’s index exit and recent dip as an entry point, while bears argue the party in leisure complexes has already gone too far. Which case does the current valuation actually support?

Price-to-Earnings of 18.8x: Is it justified?

Round One screens as inexpensive on earnings, with a P/E of 18.8x at a last close of ¥1,187.5 compared with richer peer and industry levels that suggest the market may be pricing the stock cautiously.

The P/E multiple compares the current share price with earnings per share, so it shows how much investors are willing to pay for each unit of profit. For an indoor leisure operator like Round One, this ratio often reflects how confident the market is in the durability of visitor demand and the stability of cash generation through different economic conditions.

Analyst forecasts point to earnings growth of 15.1% per year and revenue growth of 8.8% per year. Against that backdrop, a P/E of 18.8x may appear restrained when set beside the estimated fair P/E of 26.9x, a level the valuation work suggests the multiple could move towards if growth and profit quality continue to line up with expectations.

The discount is even clearer when comparing Round One with other hospitality stocks, where the industry average P/E sits at 21.7x and the peer group average is 23.3x. That gap indicates investors are paying less for each yen of earnings at Round One than for comparable operators.

Explore the SWS fair ratio for Round One.

Result: Price-to-Earnings of 18.8x (UNDERVALUED)

Still, two things could puncture that upbeat P/E story: weaker visitor traffic hitting Round One’s earnings, and further selling pressure if index trackers keep reducing exposure.

Find out about the key risks to this Round One narrative.

Another View: Round One Through Our DCF Lens

The earnings multiple tells one story for Round One, yet the SWS DCF model adds a second angle. At ¥1,187.5, the stock trades about 26.1% below an estimated future cash flow value of ¥1,606.55, which points to an undervalued setup if those projections hold. The real question is whether that cash flow path proves reliable once the index exit dust settles.

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 Round One 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

Mixed signals around Round One are clear, with both risks and rewards on the table. Move quickly, review the underlying numbers, and weigh them for yourself. To see both sides laid out in one place, start with the 5 key rewards and 1 important warning sign

Looking for more Round One investment ideas?

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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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