YONEX (TSE:7906) has drawn attention after a 23 July 2026 board meeting to approve the disposal of treasury stock as restricted stock compensation, prompting investors to reassess how this move could influence shareholder value.
See our latest analysis for YONEX.
YONEX’s recent board decision comes as the stock trades at ¥2,635, with a 1 month share price return of 12.99% and year to date share price performance still down 21.69%. The longer term picture remains stronger, with a 3 year total shareholder return of 93.30% and a 5 year total shareholder return of 278.10%, which suggests momentum has cooled recently compared with earlier years.
If this compensation move has you thinking about where else growth stories might emerge, it could be a good time to scan the market with the 10 top founder-led companies
Bulls view YONEX’s compensation move and current valuation gap as an opportunity to access quality growth at a discount. Bears, on the other hand, focus on the weaker recent share performance. Which perspective do the numbers support as you evaluate valuation next?
Preferred P/E of 18.6x: Is it justified for YONEX?
On the numbers alone, YONEX looks expensive on a P/E basis, even though the stock trades at ¥2,635 while the SWS DCF model fair value sits higher at ¥3,999.57. The shares change hands at 18.6x earnings, which sits above several benchmarks and raises questions about how much future growth is already reflected in the price.
The P/E multiple compares YONEX's current share price to its earnings per share and is a common yardstick for consumer brands and leisure related companies. For a business that manufactures and sells sporting goods and also runs a golf course management operation, investors often use P/E to weigh current profitability against expectations for future earnings and cash generation.
In YONEX's case, the picture is mixed. Earnings have grown 22.2% per year over the past 5 years, with earnings growth of 14.2% in the most recent year. Analysts currently forecast earnings growth of 10.1% per year, which is slightly faster than the wider JP market expectation of 9.9% and supported by revenue growth forecasts of 9.1% per year, quicker than the JP market at 6.2%. At the same time, return on equity is currently 15% and is forecast at 14.6% in three years, which the data classifies as low compared with a 20% threshold. Net profit margins are currently 7.4%, which is lower than last year at 7.7%, and the company carries only higher risk sources of funding because there are no customer deposits. These factors suggest the current earnings profile is solid but not exceptional, which can make a higher multiple harder to defend.
Relative to peers, that premium becomes clearer. The 18.6x P/E is higher than the estimated fair P/E of 15.3x that the SWS fair ratio model suggests the market could move towards over time. It is also above the JP Leisure industry average of 15.9x and above the peer average of 15.6x. So investors in YONEX are currently paying more per unit of earnings than the model fair value and than industry and peer benchmarks, even though the stock trades at a 34.1% discount to the SWS DCF estimate of future cash flow value of ¥3,999.57.
Explore the SWS fair ratio for YONEX
Result: Price-to-Earnings of 18.6x (OVERVALUED)
However, YONEX’s recent share price decline over the past year and its premium 18.6x P/E could limit upside if earnings or growth expectations soften.
Find out about the key risks to this YONEX narrative.
Another view on YONEX using cash flows
While the P/E of 18.6x makes YONEX look expensive on earnings, the SWS DCF model points the other way. At ¥2,635 the stock trades about 34.1% below an estimated future cash flow value of ¥3,999.57. That indicates a very different balance between potential risk and return. Which perspective do you consider more useful when cash flow analysis and earnings-based valuation lead to different conclusions?
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 YONEX 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 19 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
The mix of positives and concerns around YONEX will look different depending on your priorities, so treat this as a prompt to review the data quickly and decide where you stand. To see both sides in one place, review the 3 key rewards and 1 important warning sign
Looking for more investment ideas beyond YONEX?
Do not stop your research with YONEX. The market is full of opportunities and you risk missing strong ideas if you only focus on a single stock.
- Target reliable income by reviewing companies in the 39 dividend fortresses that may offer higher yields with more resilience.
- Hunt for potential bargains using the 19 high quality undervalued stocks that filters for quality businesses trading below estimated fair value.
- Prioritise capital preservation by checking the 62 resilient stocks with low risk scores that highlights companies with lower overall risk scores.
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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