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Recent performance snapshot
OMRON (TSE:6645) has drawn fresh attention after a period of mixed share performance, with the stock up around 4% over the past month but down about 8.5% over the past week.
For investors tracking fundamentals, the company reports annual revenue of ¥767,351 and net income of ¥34,192, with recent year on year revenue growth of 5.16% and net income growth of 15.92%.
See our latest analysis for OMRON.
At a share price of ¥5,409, OMRON has seen short term momentum soften, with a 7 day share price return of down 8.54%. However, the year to date share price return of 35.36% and 1 year total shareholder return of 46.18% stand in contrast to the weaker 3 and 5 year total shareholder returns, which are both down more than 30%.
If OMRON's recent swings have you thinking about where else growth or resilience might be emerging in automation and related technologies, consider widening your search with our robotics and automation stocks screener, starting with 34 robotics and automation stocks .
With OMRON trading around ¥5,409 despite weaker 3- and 5-year returns and recent double-digit revenue and net income growth, is the stock still undervalued, or is the market already pricing in future growth?
Price-to-earnings of 31.1x: Is it justified?
OMRON currently trades on a P/E of 31.1x, which, at a share price of ¥5,409, points to a richer earnings valuation compared with several reference points.
The P/E ratio compares the share price with earnings per share and is a quick way to see how much investors are paying for each unit of profit. For a company like OMRON, which operates across industrial automation, social systems, and healthcare, the P/E often reflects expectations around how reliably those earnings might grow and how resilient the business model may be across cycles.
On one hand, OMRON's P/E of 31.1x is below the peer average of 56.4x cited in the data, which suggests the stock trades at a lower earnings multiple than a selected peer group. On the other hand, the same 31.1x P/E sits above both the estimated fair P/E ratio of 27.5x and the broader JP Electronic industry average of 15.5x, which points to a valuation that is richer than what the wider sector and a fair value regression suggest.
Explore the SWS fair ratio for OMRON
Result: Price-to-earnings of 31.1x (OVERVALUED)
However, investors also need to weigh risks such as weaker 3 and 5 year total returns, as well as a share price that sits above the stated analyst target.
Find out about the key risks to this OMRON narrative.
Another view on valuation
While the P/E ratio hints at a rich price, the SWS DCF model points to a fair value of around ¥5,145 per share, compared with the current ¥5,409. That suggests the stock is slightly overvalued on cash flow assumptions and raises the question of how much upside is left if those assumptions hold.
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 OMRON 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 15 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 mix of cautious and constructive signals leaves you on the fence, take a closer look at the numbers yourself and decide what matters most for your portfolio, starting with 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.
Companies discussed in this article include 6645.T .
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