OSG (TSE:6136) has included several shareholder-focused measures in its latest update, including a new buyback plan, higher earnings guidance and a sharply increased year-end dividend outlook.

Those shareholder moves come on top of a powerful run in the stock, with OSG's share price up 68.27% year to date and the 1-year total shareholder return at 81.93%. The recent 14.16% 1-month share price return and a slight 2.87% retreat over 90 days suggest short-term momentum is cooling after a strong multi-year total shareholder return of 142.12% over three years and 149.61% over five years.

Capitalize on OSG's buyback and upgraded guidance theme by screening for other companies returning cash to shareholders through 27 dividend fortresses .

OSG has already rewarded shareholders with a steep rise and richer payouts. The real tension now is whether the latest guidance and buyback leave meaningful upside ahead or mostly in the rear view, which is where valuation comes in.

Preferred P/E of 12.2x for OSG: Is it justified?

OSG now trades on a P/E of 12.2x, which is below both the wider JP market and its Machinery peers, even after the sharp share price move toward ¥3,861.

The P/E ratio compares what investors are paying for each unit of current earnings. For a tools manufacturer like OSG with a long operating history and global footprint, earnings power often matters more than short bursts of revenue growth.

Recent profit performance adds an extra twist. Earnings grew by 96% over the past year and have risen by 8.1% per year over five years, with net profit margins at 13.9% versus 8.5% a year earlier. Against that backdrop, a 12.2x P/E looks lower than both the JP Machinery industry on 13.2x and the broader JP market on 13.8x. However, it still screens as expensive relative to an estimated fair P/E of 10.8x that our model suggests the market could move closer to over time.

Explore the SWS fair ratio for OSG.

Result: Price-to-Earnings of 12.2x (ABOUT RIGHT)

Still, OSG's narrative can break if earnings momentum stalls again after last year's dip in annual net income growth, or if buybacks crowd out productive investment.

Find out about the key risks to this OSG narrative .

Another view on OSG's value

A second lens tells a different story. Our DCF model estimates the future cash flow value for OSG at ¥3,116.06 per share, while the stock trades at ¥3,861. On this view the shares look expensive, so the question is whether the cash returns and guidance justify paying up.

Look into how the SWS DCF model arrives at its fair value.