Hokkaido Electric Power Company (TSE:9509) Files ¥400 Billion Bond Shelf, Is The Stock Cheap?

Hokkaido Electric Power Company (TSE:9509) has filed a shelf registration to issue up to ¥400 billion in bonds. This financing option matters for investors because it outlines a clear path to potential future capital raising.

See our latest analysis for Hokkaido Electric Power Company.

The bond shelf registration comes after a period where Hokkaido Electric Power Company’s 90 day share price return of 18.91% contrasts with a small decline year to date, while the 5 year total shareholder return of 136.38% points to stronger longer term gains.

If this kind of capital raising story has your attention, it may be a good moment to look at other regulated power and grid operators through our 39 power grid technology and infrastructure stocks

Hokkaido Electric Power Company trades about 28% below the average analyst target after a strong 90 day rebound. Is the current discount a genuine opportunity, or a sign the market is still cautious for good reason?

Preferred P/E of 8.4x for Hokkaido Electric Power Company, is it justified?

On a P/E basis, Hokkaido Electric Power Company trades at 8.4x earnings, which screens as cheaper than the broader Japan market, while still sitting above the closest peer average.

The P/E ratio compares the current share price to earnings per share. For utilities like Hokkaido Electric Power Company, it gives a quick read on how much investors are paying for each unit of current earnings in a sector that often has regulated returns and relatively steady demand.

Hokkaido Electric Power Company is considered good value against the Asian Electric Utilities group, where the average P/E sits at 13.8x. It also trades below an estimated fair P/E of 12.6x, a level that suggests the market could shift closer to that fair ratio if earnings and sentiment stay aligned with current expectations. However, compared with a peer average of 7.1x, the stock is more expensive, which points to the market assigning a premium relative to that tighter peer set.

Explore the SWS fair ratio for Hokkaido Electric Power Company

Result: Price-to-Earnings of 8.4x (UNDERVALUED)

However, the recent 1 year total return that declined 7.46% and the 90 day rebound could both unwind quickly if earnings momentum or regulatory conditions weaken for Hokkaido Electric Power Company.

Find out about the key risks to this Hokkaido Electric Power Company narrative.

Another View on Hokkaido Electric Power Company’s Value

While the P/E comparison presents Hokkaido Electric Power Company as good value relative to the wider market, the SWS DCF model suggests a different perspective. On this view, the stock at ¥1,088 trades above an estimated future cash flow value of ¥996.98, which raises the question of whether investors are already paying a premium for expected earnings growth.

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 Hokkaido Electric Power 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 26 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 the mixed signals around Hokkaido Electric Power Company have you curious, this is a good time to review the data directly and move quickly to form your own view. To see both sides of the story in one place, start with the 2 key rewards and 3 important warning signs.

Looking for more investment ideas beyond Hokkaido Electric Power Company?

If you are weighing what comes next after reviewing Hokkaido Electric Power Company, broaden your watchlist with a few focused screens that highlight different strengths.

• Target companies that look attractively priced relative to quality by reviewing the 26 high quality undervalued stocks.
• Prioritise resilience and capital strength by using the solid balance sheet and fundamentals stocks screener (41 results).
• Spot potential early stage opportunities with healthier fundamentals through the 1 elite penny stocks with strong financials.

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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