Nissan Chemical (TSE:4021) Posted Record First Quarter Results, Is The Valuation Still Attractive?

Why Nissan Chemical Stock Is Back On Investor Radar

Nissan Chemical (TSE:4021) is drawing fresh attention after record first quarter sales and operating profit, a higher full year dividend forecast, and updated long term semiconductor materials targets.

See our latest analysis for Nissan Chemical.

The record first quarter update and higher dividend forecast have arrived alongside strong momentum, with Nissan Chemical’s year to date share price return of 46.51% and 1 year total shareholder return of 53.55% standing out even after some recent consolidation.

If this kind of earnings driven move has your attention, it can be useful to see what else is setting up strong share price trends, including 11 top founder-led companies

Nissan Chemical looks like a strong business after record first quarter figures and a higher dividend outlook. After a share price rise of more than 50% over 1 year, the real question is how the current valuation stacks up.

Preferred P/E of 19.9x for Nissan Chemical: Is It Justified?

Nissan Chemical currently trades on a P/E of 19.9x, based on a last close of ¥7,837 and a mixed set of value signals from different yardsticks.

The P/E ratio compares the current share price to earnings per share. For a profitable chemicals company like Nissan Chemical, it shows how much investors are paying for each unit of earnings, and whether expectations around future profit growth are demanding or relatively modest.

On one hand, Nissan Chemical screens as good value when set against peers, with a P/E of 19.9x compared to a peer average of 28.7x. On the other hand, the stock is described as expensive versus an estimated fair P/E of 16.7x and also higher than the broader JP Chemicals industry average of 12.7x. Those fair value and industry comparisons indicate a level the market could move towards if expectations around earnings growth and returns change.

Explore the SWS fair ratio for Nissan Chemical

Result: Price-to-Earnings of 19.9x (ABOUT RIGHT)

However, investors still need to watch for pressure if Nissan Chemical’s semiconductor materials targets prove slower to materialise, or if recent share price momentum cools.

Find out about the key risks to this Nissan Chemical narrative.

Another View On Nissan Chemical’s Valuation

The P/E picture around Nissan Chemical looks mixed, yet the SWS DCF model points in a different direction. At a share price of ¥7,837 and an estimated future cash flow value of ¥11,857.27, the stock is described as trading at a discount. Which lens do you rely on more when earnings expectations shift?

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 Nissan Chemical 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

If this mixed but generally optimistic picture around Nissan Chemical has you thinking, now is a good time to review the data yourself and pressure test your view. To see what is driving optimism on the stock, take a closer look at the 4 key rewards.

Looking For More Investment Ideas Beyond Nissan Chemical?

If Nissan Chemical has sharpened your focus, do not stop here. Broader ideas can help you stress test your thinking and spot opportunities you might otherwise miss.

• Spot potential value opportunities early by checking the 19 high quality undervalued stocks that combine quality fundamentals with pricing that may not fully reflect them yet.
• Build a steadier income focused approach by reviewing the 39 dividend fortresses that offer higher yields with an emphasis on resilience.
• Shift your attention to financial strength by scanning the solid balance sheet and fundamentals stocks screener (40 results) so you are not caught out by weak balance sheets when conditions change.

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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