A Look At Nittetsu Mining (TSE:1515) Valuation After Its New Share Buyback Plan

Why Nittetsu Mining (TSE:1515) is in focus after its new buyback plan

Nittetsu Mining (TSE:1515) has attracted fresh attention after its Board approved a sizeable share repurchase program, authorizing up to 5,000,000 shares for up to ¥10,000 million, with all repurchased shares set for cancellation.

See our latest analysis for Nittetsu Mining.

The buyback decision comes after a choppy stretch for the share price. There was a 1-day share price return of 6.67%, following a 7-day share price return decline of 23.54% and a 30-day share price return decline of 22.28%. This is set against a 90-day share price return of 50.93%, a year to date share price return of 37.61% and a very large 5-year total shareholder return. Taken together, these figures indicate strong longer term momentum alongside recent volatility as investors reassess Nittetsu Mining’s risk profile and capital allocation.

If this buyback has you thinking about where else capital intensive stories could go next, consider widening your search with our screener of 8 top copper producer stocks.

With the buyback on the table and a value score of 1 suggesting attractive metrics, the key question is whether Nittetsu Mining is still trading below its fundamentals or if the market is already pricing in future growth.

Price-to-Earnings of 24.1x: Is it justified?

On a P/E of 24.1x at a last close of ¥3,070, Nittetsu Mining looks cheaper than its immediate peers, but richer than the broader Metals and Mining group.

The P/E ratio compares the share price to earnings per share, so it essentially shows how much investors are paying for each unit of profit. For a miner that combines resources, machinery, real estate, and renewable energy, this can reflect expectations around how durable and diversified those earnings are.

Here, the company is described as good value versus its direct peers, with a P/E of 24.1x compared to a peer average of 41.2x. That suggests the market is not assigning the same premium multiple as to some comparable names, even though Nittetsu Mining is reported to have high quality earnings, profit growth of 18.5% over the past year, and 8.5% per year over five years. At the same time, the shares are labeled expensive against the wider JP Metals and Mining industry, where the average P/E sits at 13x.

This gap is important. Against peers, the lower P/E hints at potential value if you think the quality and growth of earnings stacks up. Against the industry, the higher P/E implies investors are paying more than they do for the average miner. This may reflect the company’s mix of businesses and recent earnings momentum, or simply a willingness to pay up for its profile.

See what the numbers say about this price — find out in our valuation breakdown.

Result: Price-to-Earnings of 24.1x (ABOUT RIGHT)

However, you still have to weigh exposure to cyclical metals demand, as well as the complexity of running mining, machinery, real estate, and renewable energy under one umbrella.

Find out about the key risks to this Nittetsu Mining narrative.

Another view using our DCF model

The P/E suggests Nittetsu Mining is reasonably placed, but our DCF model tells a different story. With the shares at ¥3,070 and our future cash flow value estimate at ¥2,218.07, the stock screens as overvalued on this method. So which signal do you trust more: earnings today, or cash flows tomorrow?

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 Nittetsu Mining 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 24 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

Does this mixed picture leave you curious rather than convinced? Take a moment to review the full datapoints for yourself, then weigh up the 1 key reward and 2 important warning signs before deciding what it all means for you.

Looking for more investment ideas?

If you want to turn this research into action, do not stop at one stock. Use the screeners below to uncover ideas that match your style.

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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