Is Kadokawa (TSE:9468) Expensive As Manta Opens Its Manga Catalog To Global Readers?

Manta’s new worldwide distribution deals with Kadokawa (TSE:9468) and other Japanese publishers place more than 300 manga titles on a single global platform. This move gives Kadokawa expanded access to mobile and web readers.

Kadokawa’s share price has moved to ¥3,591, with a 90 day share price return of 8.72% and a year to date share price return of 14.88%. The 1 year total shareholder return of 9.84% points to momentum that recent licensing news may be helping to support.

Scan Kadokawa alongside other content and media stocks that could benefit from global IP demand by checking the 74 high quality undiscovered gems list.

The recent share price move and fresh global licensing reach present a simple fork for Kadokawa investors. Is most of the upside already reflected, or is the market still discounting what this IP engine could be worth?

Preferred Price-to-Sales of 1.8x: Is It Justified For Kadokawa?

Kadokawa currently trades on a P/S of 1.8x, which screens as expensive compared both with similar media stocks and with the broader JP Media industry.

The P/S ratio compares the company’s market value with its revenue. For a content and IP group like Kadokawa, which spans publishing, animation, games, web services and education, this metric gives a quick sense of how much investors are paying for each unit of sales across those segments.

On one side, Kadokawa is unprofitable today, with a reported net loss of ¥6,120, so a higher P/S can suggest the market is placing weight on future improvement rather than current earnings. On the other side, the company’s P/S of 1.8x is above the estimated fair P/S of 2.2x that the SWS fair ratio model points to as a level the valuation could reasonably drift toward if sentiment and fundamentals stay aligned.

The comparison gets sharper when set against peers. Kadokawa’s P/S of 1.8x is higher than the peer average of 1.3x and also above the JP Media industry average of 0.9x. That signals investors are already paying a premium for Kadokawa’s IP catalogue and multi segment reach compared with other media stocks, while the fair ratio work suggests there is still some room before the valuation matches the level implied by that model.

Explore the SWS fair ratio for Kadokawa.

Result: Price-to-sales of 1.8x (OVERVALUED)

However, Kadokawa still faces pressure from its current net loss and the risk that global licensing deals will not translate into stronger revenue or margin recovery.

Find out about the key risks to this Kadokawa narrative.

Another View On Kadokawa Using The SWS DCF Model

The SWS DCF model points to a fair value of ¥2,596.75 for Kadokawa, which is below the current share price of ¥3,591. On this view the stock screens as overvalued. The first method suggested some headroom on sales, while this one raises the question of how much optimism is already in the price.

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 Kadokawa 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 23 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

With sentiment mixed across Kadokawa’s valuation checks, it makes sense to move quickly and compare the underlying data with your own expectations. To see what has investors optimistic about the company today, review the 1 key reward.

Looking For More Kadokawa 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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