Yes, definitely undervalued. If you can forgive citing analyst opinions, S&P suggests a 12-month price target of $83 (!) for CAJ, gives it 5 out of 5 possible stars and the highest possible rank for fair value, etc. I think part of the fairly slow movement is US investor recalcitrance toward the Japanese market in general, coupled with the difficulty of predicting the yen/dollar currency rates. But in terms of a company that makes a LOT of money per share, here's a huge solid company with a 13.7 P/E and a good chance for growth.
But then it begs the question when will the market wake up? Or is this stock doomed to being unappreciated for quite a while?
Part of the reason I am so skeptical is that because Canon is such a large, well-known company I find it hard to believe such a huge valuation disparity exists without some good reason. You would think that CAJ would be well covered.
However, I just looked and it seems there are a grand total of 2 covering CAJ. Interesting...
Hooray, a new post on the Canon board! I haven't done as thorough an analysis as it sounds like you've done, but I will agree with you that Canon seems undervalued. First off, take a look at their balance sheet. No debt to speak of and over $8/share in cash. Then look at their earnings of $4/share. At $52, it trades at 13x. Take out the cash and the multiple is more like 11x. And earnings are expected to grow at a decent clip next year, too (high single digits looks very possible). They're not going to get the multiples that high tech wonder stocks get, especially as a mature large cap Japanese stock, but you can easily picture a multiple of 14 on their earnings, especially if they get some attention in the market. If you think they can earn $4.25 next year, you get 4.25x14 plus another 8 in cash, which is $68. That's 30% above today's price. The downside is limited to 10% in my opinion, so for a 3:1 potential gain/loss ratio, I think Canon is worth holding. Will its value be recongized in the next year or years? Who knows, but it's worth a shot.
Just been researching a Song digital camera and found that Canon makes them and they are generally better than the ones from Sony. This led to a more deep check of just what Canon is all about and I found that Canon:
- is soon to pass Sony in digial camera production.
- regained lead in Japanese printer market.
- total sales growing faster than Sony.
- has better PE ratio than Sony.
It may not be 'undervalued' but it seems to be a better deal than Sony or many companies in the good ol' USA....