IHI Corporation (TSE:7013): Valuation Insights Following Upgraded Earnings Guidance and Dividend Increase

IHI (TSE:7013) released revised earnings guidance for the upcoming fiscal year, projecting stronger revenue and profits. The company also raised its second-quarter dividend compared to last year, which highlights confidence from management and potential investor interest. See our latest analysis for IHI. IHI’s recent upward revisions and dividend boost appear to have fueled renewed optimism, with the stock posting a remarkable 135.8% share price return so far this year. Momentum is clearly building, as shown by a 25.8% gain over the past three months and a 1-year total shareholder return of nearly 139%, which puts longer-term holders firmly in the winners’ circle. If you’re interested in what else is working right now, this could be the perfect moment to broaden your radar and discover fast growing stocks with high insider ownership With such significant gains and upbeat forecasts, investors now face a crucial question: Is IHI still trading below its true value, or has the market already factored in the company’s growth prospects? Most Popular Narrative: 1.9% Undervalued IHI’s widely followed narrative puts its fair value at ¥3,023, slightly above the latest close of ¥2,965. Market sentiment has momentum, but will the assumptions stand up? "Strong sales in civil aero engines spare parts may not be sustainable, risking future revenue declines and overoptimistic stock valuations. Improper conduct in Power Systems and seasonal downturns could hurt net margins and revenue, with rising SG&A expenses adding further pressure." Read the complete narrative. Record sales, margin shifts, and a future profit multiple that is higher than most industry peers sit at the heart of this calculation. Wondering what bold projections drive this target? Dive in to uncover the surprising details analysts are betting on now. Result: Fair Value of ¥3,023 (UNDERVALUED) Have a read of the narrative in full and understand what's behind the forecasts. However, ongoing strength in civil aero engine sales or improvements in financial soundness could still challenge the current cautious outlook on IHI. Find out about the key risks to this IHI narrative. Another View: Market Price and Intrinsic Value While analysts' consensus sees IHI as modestly undervalued, our DCF model presents a different perspective. According to the SWS DCF model, IHI is trading at ¥2,965, which is well above its estimated fair value of ¥2,467.8. This suggests potential overvaluation based on projected future cash flows. Could the market be too optimistic, or are there risks not fully captured? Look into how the SWS DCF model arrives at its fair value. 7013 Discounted Cash Flow as at Nov 2025Simply Wall St performs a discounted cash flow (DCF) on every stock in the world every day (check out IHI 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 908 undervalued stocks based on their cash flows. If you save a screener we even alert you when new companies match - so you never miss a potential opportunity. Build Your Own IHI Narrative If you have a different perspective or want to dig deeper yourself, you can craft a personal narrative using our data in just a few minutes, Do it your way A great starting point for your IHI research is our analysis highlighting 2 key rewards and 2 important warning signs that could impact your investment decision. Looking for More Smart Investment Ideas? Don’t let great opportunities pass you by. Broaden your potential and seize your edge with tailored stock picks for the current market environment. Uncover the next wave of tech disruption by zeroing in on AI trends with these 26 AI penny stocks, which are set to transform industries. Boost your long-term returns and enjoy steady income by targeting these 16 dividend stocks with yields > 3% offering yields above 3%. Capitalize on undervalued gems before the rest of the market catches on, thanks to these 908 undervalued stocks based on cash flows pinpointing strong cash flow opportunities. 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.