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    Is TOMY Company (TSE:7867) Undervalued After Its FTSE All World Index Removal?

    Simply Wall St·09/27/2026 12:14:34
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    TOMY Company (TSE:7867) has been removed from the FTSE All-World Index (USD). This change can trigger forced buying and selling as index trackers rebalance their portfolios.

    Price action has been strong around TOMY Company, with the share price at ¥4,086 and a 30 day share price return of 11.49% building on a 47.32% year to date move. The 5 year total shareholder return of 307.44% points to powerful long term momentum.

    Scan for other momentum stories moving on index changes and corporate reshuffles with our hand picked 74 high quality undiscovered gems that share some of TOMY Company's recent catalysts.

    This recent surge in TOMY Company shares collides with a wide valuation range, from analyst targets near ¥3,995 to a much higher intrinsic estimate. Where does fair value really sit after this index driven move?

    Price-to-Earnings of 28.5x: Is it justified?

    TOMY Company's share price at ¥4,086 is being valued on a P/E of 28.5x, which signals a rich earnings multiple compared with many listed peers.

    The P/E ratio links the current market price to the last 12 months of earnings per share. For a toy and entertainment group like TOMY Company, that measure reflects what investors are willing to pay today for each unit of past profit, with an eye on future earnings power.

    Analysts expect earnings to grow 12.12% per year while revenue is projected to rise 3.2% per year. That profile suggests the market is paying up for profit growth rather than strong top line expansion, even as reported earnings were hit by a one off loss of ¥5.4b and a decline in profit margins from 6.7% to 4.5%.

    Compared with the JP Leisure industry average P/E of 16.3x and a fair P/E estimate of 18x, TOMY Company's 28.5x multiple is materially higher. This implies investors are assigning a premium well above both sector norms and the level our fair ratio model could move toward over time.

    Explore the SWS fair ratio for TOMY Company.

    Result: Price-to-Earnings of 28.5x (OVERVALUED)

    Still, TOMY Company faces the risk that index related buying fades or that profit margins remain under pressure, which could challenge the current valuation premium.

    Find out about the key risks to this TOMY Company narrative.

    Another View on TOMY Company’s value

    The 28.5x P/E ratio presents TOMY Company as expensive, yet the SWS DCF model suggests a different perspective. With our estimate of future cash flow value at ¥6,581.73 per share compared with a market price of ¥4,086, the stock screens as undervalued. Which signal do you consider more informative?

    Look into how the SWS DCF model arrives at its fair value.

    7867 Discounted Cash Flow as at Sep 2026
    7867 Discounted Cash Flow as at Sep 2026

    Simply Wall St performs a discounted cash flow (DCF) on every stock in the world every day (check out TOMY Company 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

    Sentiment on TOMY Company is clearly mixed, with strong momentum and valuation tension sitting alongside real risks and potential upside. Act quickly, pull up the underlying data, test both the premium multiple and the DCF signal against your own expectations, then weigh the 2 key rewards and 2 important warning signs.

    Looking for more investment ideas beyond TOMY Company?

    If TOMY Company's setup has sharpened your focus, do not stop here. Cast the net wider so you are not relying on a single story.

    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.