TORIDOLL Holdings (TSE:3397) Could Be 18% Undervalued As Full Year Guidance Improves

TORIDOLL Holdings (TSE:3397) shares are in focus after first quarter results showed sales of ¥72,318 million and lower net income of ¥3,031 million, alongside fresh guidance projecting higher full year revenue and profit.

See our latest analysis for TORIDOLL Holdings.

The latest guidance appears to have supported TORIDOLL Holdings’ share price, with a 7.13% 1 month share price return and 12.97% 3 month share price return, even though the 1 year total shareholder return has declined 15.42%.

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TORIDOLL Holdings appears to be a solid restaurant group with many brands and steady sales, but the share price has already moved on the upbeat guidance. The key question now is whether the stock still offers value at ¥4,355.

Preferred Price-to-Sales of 1.4x for TORIDOLL Holdings: Is it justified?

On the SWS DCF model, TORIDOLL Holdings is trading at ¥4,355 compared to an estimated future cash flow value of ¥5,276.99, which points to a 17.5% discount. That sits alongside a preferred multiple view that the stock trades on a P/S ratio of 1.4x, so it helps to see how these two signals line up.

The DCF model estimates what TORIDOLL Holdings’ future cash flows might be and then discounts them back to today using a required rate of return. This approach tends to put more weight on the long term cash generation profile rather than short term earnings volatility or one off items.

In TORIDOLL Holdings’ case, the company has recently reported a large one off loss of ¥12.7b that affects the last 12 months of profit and margins. The DCF framework helps look through that one off impact and instead uses projected earnings growth, which is currently expected at 50.75% per year, and revenue forecasts of 5.4% per year, to frame a longer run value for the stock.

Based on this, the DCF result of ¥5,276.99 is higher than the current share price, while the 1.4x P/S ratio screens as good value versus an estimated fair P/S of 2.2x. That fair ratio suggests a level the market could move towards if those cash flow and growth assumptions hold.

Explore the SWS fair ratio for TORIDOLL Holdings

Result: Preferred multiple of 1.4x price-to-sales ratio (UNDERVALUED)

However, TORIDOLL Holdings still faces uncertainty around the recent ¥12.7b one off loss and relies on projected growth rates that may not occur as expected.

Find out about the key risks to this TORIDOLL Holdings narrative.

Another view on TORIDOLL Holdings’ value

The market price of TORIDOLL Holdings at ¥4,355 implies a P/S ratio of 1.4x. That is higher than both the JP Hospitality industry average of 0.9x and peer average of 1.2x, while remaining below an estimated fair ratio of 2.2x.

This combination of peer and industry premiums, alongside a gap to the fair ratio, indicates both upside potential and the risk that expectations are already reflected in the current P/S. The key question is whether you think TORIDOLL Holdings can deliver the performance needed for the market to move closer to that 2.2x level.

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

Simply Wall St performs a discounted cash flow (DCF) on every stock in the world every day (check out TORIDOLL Holdings 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 26 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

Uncertain what to make of the mixed signals around TORIDOLL Holdings and its recent results? Act quickly and review the full picture around its 2 key rewards and 2 important warning signs through the 2 key rewards and 2 important warning signs.

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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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