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.
Sumitomo Rubber Industries, Ltd.Strong H1 results (operating profit +41%) but full-year operating profit guidance cut by 11 billion yen, driving the 10% share decline.
