Sumitomo Rubber Industries, Ltd.

Despite strong first-half results for fiscal year ending December 2026, Sumitomo Rubber Industries' shares have fallen more than 10% over the past month. First-half revenue was 619.8 billion yen, up 8.3% year-on-year; operating profit was 38.1 billion yen, up 41.1%; and net profit was 25.9 billion yen, up about 80%. However, the stock price fell from a high of 2,488 yen on August 7 to 2,099 yen by September 4. The market is concerned about a downward revision to the full-year outlook, with the operating profit forecast cut by 11 billion yen from 100 billion yen at the start of the fiscal year to 89 billion yen. The first-half operating profit progress rate was only 42.9%, and the large gap between the first-half growth rate and the full-year growth rate, along with a plan weighted toward the second half, may have been a concern. On valuation metrics, the stock appears cheap with a PER of 10.03 times and a PBR of 0.73 times, but the equity ratio of 49.0% is 13 percentage points below the industry median, highlighting significant use of debt. Over the past five fiscal years, operating profit has fluctuated widely: 49.2 billion yen, 15 billion yen, 64.5 billion yen, 11.2 billion yen, and 82.6 billion yen. Investors seem to be pricing in this earnings volatility, keeping the PER low.