Inpex (TSE:1605) Lifted Guidance And Buybacks, Is The Stock Still Undervalued?
Inpex (TSE:1605) has caught investor attention after a cluster of shareholder focused moves, including a sizeable share repurchase program, higher dividends, raised full year guidance, and a year on year rise in first half net income.
See our latest analysis for Inpex.
These shareholder friendly moves have arrived alongside a strong run in Inpex's share price, with a 1 month share price return of 9.62% and a year to date share price return of 21.37%. The 1 year total shareholder return is 66.88%, pointing to momentum that contrasts with a 90 day share price return that has declined 3.55%.
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Inpex now combines a broad energy portfolio with higher dividends, a large buyback and upgraded guidance. After such a strong run in the share price, are investors paying a fair price for that package today?
Most Popular Narrative: 12% Undervalued
Inpex last closed at ¥3,782, while the most followed narrative sets fair value at ¥4,300 using a detailed earnings and margin roadmap built out to 2029.
The analysts have a consensus price target of ¥4300.0 for Inpex based on their expectations of its future earnings growth, profit margins and other risk factors. However, there is a degree of disagreement amongst analysts, with the most bullish reporting a price target of ¥4950.0, and the most bearish reporting a price target of just ¥3220.0.
Want to see what sits behind that valuation gap for Inpex? The narrative leans on steady top line expansion, firmer margins and a higher future earnings multiple. Curious which assumptions really carry the model?
Result: Fair Value of ¥4,300 (UNDERVALUED)
Have a read of the narrative in full and understand what's behind the forecasts.
However, investors still need to weigh the risk that faster renewable adoption or setbacks at major LNG projects could undermine the earnings and assumptions of higher future P/E ratios for Inpex.
Find out about the key risks to this Inpex narrative.
Another View On Inpex Using Market Multiples
The analyst narrative points to Inpex trading below a fair value of ¥4,300. Yet on simple market multiples the picture is more mixed. Inpex trades on a P/E of 10.1x. That is below the wider JP market at 14x, but above a peer group average of 6.2x.
A fair ratio of 11.7x suggests the P/E could move closer to that level over time, although there is no guarantee this happens. For investors, the gap between 6.2x, 10.1x and 11.7x raises a practical question: Is the current price offering a margin of safety, or is it already charging a premium for quality and income?
See what the numbers say about this price — find out in our valuation breakdown.
Next Steps
With mixed signals around Inpex, this is a good time to check the data for yourself and decide how the balance of risks and rewards stacks up. To see both sides of the story in one place, review the 2 key rewards and 1 important warning sign
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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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