Diamond editorial staff ranked undervalued stocks among 30 real estate and transportation companies based on the gap between proprietary theoretical stock prices and market prices. Nomura Real Estate Holdings ranked 8th and Central Japan Railway Company (JR Central) ranked 2nd, while the top-ranked company remains undisclosed and will be revealed in full on the next page.
This feature explains a method for determining whether a stock is undervalued by using the gap between its market price and theoretical stock price, which takes into account the company’s future outlook and financial condition, in addition to conventional indicators such as PER and PBR. The theoretical stock price is calculated using a proprietary formula based on the residual income model, which is presented as a method of assessing enterprise value by combining asset value and business value. The article explains the meaning of residual income and the broad outline of its calculation, and introduces the model as one with broad applicability.
The next page presents the full ranking of undervalued stocks among 30 companies in the real estate and transportation sectors. Stocks including Nomura Real Estate Holdings, ranked 8th, and Central Japan Railway Company (JR Central), ranked 2nd, are listed among the higher-ranked entries, along with companies judged to be undervalued within their respective sectors. The ranking includes construction and property development companies as well as transportation companies, and examines their undervaluation in the current earnings environment.
The feature also addresses the background to the concepts used to assess undervalued stocks, including the use of accounting figures as the basis for calculating theoretical stock prices and the consideration of residual-income-based approaches in discussions concerning the inheritance-tax valuation of shares in unlisted companies by the National Tax Agency.