REVERSE DCF × BASE RATES
If today’s price is right, how fast must profits shrink?
A low price is itself a forecast. Working backwards from each candidate’s enterprise value, we find the yearly change in operating profit over the next ten years that the price implies, then check how often US companies of the same size actually shrank that fast in a decade (Japanese companies are compared with US ones too, as ten years of consistent Japanese data are not available). Read it next to the AI’s reasons for the discount: does the worry justify that much shrinkage?
In three lines
- The median Japanese candidate is priced as if its operating profit will shrink 12% a year for the next ten years; the median US candidate, grow 1% a year.
- Among US companies of the same size, sales shrank that fast over a decade in only 9% of cases (for the median candidate), but operating profit did in 27%. If the market is right, the damage comes from collapsing margins rather than vanishing sales.
- The harshest assumption is Chiyoda Corporation: -44% a year. It carries the possible one-off profit flag, so the market may simply expect this year’s profit not to last.
What the price assumes: Japan
Sorted from the harshest assumption. The bars show how often US companies of the same size did this badly or worse over ten years (shrank at least that fast). Past comparison: sales and operating profit of companies reporting to the SEC under US GAAP, from each start year 2009–2015 to ten years later (last 2025), grouped by sales at the start. Japanese candidates are compared with US companies of the same size in dollars; there is no Japanese equivalent here yet.
| Company | EV/EBIT | Price assumes (op. profit per year) | Same-size US firms with sales growth this low or lower | …with operating profit growth this low or lower | Why it may be cheap (AI) | How a buyer could still lose (AI) |
|---|---|---|---|---|---|---|
| Chiyoda Corporation6366Possible one-off profit | 0.8x | -43.8%at 7%–9%: -44% to -43% | 0% | 10% | Market discounts this Mitsubishi-controlled contractor over its no-dividend preferred redemption and history of volatile, project-driven earnings. | The current profit surge stems mainly from a one-time cost/margin revision on the GPX project, not necessarily recurring. |
| SHINNIHON CORPORATION1879 | 1.8x | -25.2%at 7%–9%: -26% to -24% · EV floored at 30% of market value (else -34%) | 0% | 20% | Profits hinge on Tokyo condo prices, and rate-hike fears plus founder-family ownership keep the stock's valuation subdued. | The nominated (non-bid) order ratio jumped from 54.6% to 80.0% in one year; if this reverses, the recent profit growth could unwind. |
| Mars Group Holdings Corporation6419 | 1.9x | -23.8%at 7%–9%: -25% to -23% · EV floored at 30% of market value (else -24%) | 1% | 31% | Tied to a shrinking pachinko industry and a post-boom earnings reversal, the market doubts the profit level is durable. | The one-off demand from the banknote redesign drove two years of record results; this year's decline shows that boost reversing, so the earnings base behind the low PER may have been temporary. |
| PARKER CORPORATION9845 | 2.2x | -21.3%at 7%–9%: -22% to -20% | 0% | 21% | Parent firm and founding families hold over 30%, and heavy reliance on autos keeps the market wary despite record profits. | The profit recovery leans on temporary auto-production normalization and stabilized raw material costs, so the improved 8.8% operating margin could unwind if conditions reverse. |
| Fujii Sangyo Corporation9906 | 2.2x | -20.9%at 7%–9%: -22% to -20% | 0% | 21% | A founder-family, supplier, and regional-bank held wholesaler seen as static, so the market mostly ignores its shares. | The company warns that a slump in private capex or housing starts would intensify price competition further, showing current profits are heavily tied to the construction investment cycle. |
| Shinwa Co., Ltd.7607 | 2.4x | -19.2%at 7%–9%: -20% to -18% · EV floored at 30% of market value (else -26%) | 1% | 22% | Seen as a Toyota-dependent supplier with a stable, cross-held shareholder base that keeps the stock inert. | The plan for FY2026 calls for a profit decline due to slowing EV/battery capex, China investment restraint, and delayed semiconductor investment, risking disappointment for growth-based buyers. |
| NAKANO CORPORATION1827 | 2.5x | -18.9%at 7%–9%: -20% to -18% | 1% | 22% | Closed founder/foundation/bank ownership and a reserve-first capital policy keep the market wary of profit driven by a one-off overseas project. | Southeast Asia operating profit jumped from about 1 million yen to 2.447 billion yen, driven by progress on one large project—a potentially non-recurring surge. |
| ASAHI BROADCASTING GROUP HOLDINGS CORPORATION9405 | 2.8x | -16.8%at 7%–9%: -18% to -16% | 1% | 22% | Loyal holders like Asahi Shimbun and TV Asahi, plus broadcast-law ownership limits, shield this ad-dependent broadcaster from market pressure to unlock value. | Ordinary profit swung from 4.8bn to 2.7bn to just 0.7bn yen and back to 4.4bn over five years, so a weaker ad market could quickly erase the recent profit recovery. |
| NISSAN SHATAI CO., LTD.7222 | 3.1x | -15.5%at 7%–9%: -17% to -14% | 1% | 15% | Heavy 98% sales dependence on parent Nissan keeps the market from rewarding improved profits. | Impairment and restructuring charges already booked for the Shonan plant conversion suggest further model discontinuations could bring more losses. |
| TACHI-S CO.,LTD.7239 | 3.1x | -15.3%at 7%–9%: -17% to -14% | 1% | 15% | Automakers' shifting model strategies and plant relocations keep swinging earnings, so the market stays cautious. | Overseas local-currency items are translated into yen, so profit can swing with exchange rates even if local performance is unchanged, risking a reversal of today's gains. |
| FJ NEXT HOLDINGS CO., LTD.8935 | 3.3x | -14.4%at 7%–9%: -16% to -13% | 1% | 23% | Distrust of investment-condo sellers plus founder-controlled, closely held shares leave the stock ignored despite growing profit. | Net income was 10.0 billion yen but operating cash flow only 7.1 billion yen, as inventory build-up in for-sale properties means profit is not fully backed by cash. |
| Densan System Holdings Co., Ltd.4072 | 3.3x | -14.4%at 7%–9%: -16% to -13% | 1% | 23% | Regional banks dominate its shareholder base, and its conservative retention-first dividend policy make the market view it as a low-growth regional IT holding firm. | Contracted system development is prone to cost overruns from spec changes, and unprofitable projects already weighed on profit last period. |
| ENDO Lighting Corporation6932 | 3.3x | -14.0%at 7%–9%: -15% to -13% | 1% | 23% | A founder-linked holding company controls over a third of shares, leaving low float and thin institutional interest. | The interior furniture segment's profit fell 67% year over year, from 78 million to 25 million yen, showing one diversification pillar already weakening. |
| HOKURIKU ELECTRICAL CONSTRUCTION CO.,LTD.1930 | 3.4x | -13.7%at 7%–9%: -15% to -12% | 1% | 23% | Heavy reliance on parent utility's orders and a shrinking, aging regional economy weigh on the market's view of its growth prospects. | A rise in receivables caused operating cash flow to drop sharply from the prior year, so cash generation lagged reported profit growth. |
| MARUZEN CO.,LTD.5982 | 3.5x | -13.4%at 7%–9%: -15% to -12% | 2% | 23% | Owned largely by a holding firm and Hikari Tsushin-linked funds, it parks record cash in time deposits instead of returning it. | Despite record profit, operating cash flow fell 11.5% year on year, a sign cash generation is not keeping pace with reported earnings. |
| MITANI CORPORATION8066 | 3.5x | -13.3%at 7%–9%: -15% to -12% | 2% | 16% | Family-controlled conglomerate with idle cash pile that the market refuses to value fully. | Growth strategy relies on M&A, but the company itself flags risk of impairment losses if acquired businesses underperform, which could erode accumulated profits. |
| DOSHISHA CO.,LTD.7483 | 3.7x | -12.5%at 7%–9%: -14% to -11% | 2% | 24% | A conglomerate wholesaler with 30-plus niche units, a founder-family holder above 35%, and cash piling up debt-free with no clear use. | Sales to a single major customer, Daiso, account for 10.9% of total sales, so any change in that customer's ordering could undercut segment growth. |
| NEW COSMOS ELECTRIC CO.,LTD.6824 | 3.8x | -12.2%at 7%–9%: -14% to -11% | 2% | 24% | Family, business partners and Iwatani hold most shares, and growth relies on a US detector surge, so the market stays cautious. | The business is a single gas-detector segment where both household and industrial products swing with economic and capex cycles, offering no real diversification cushion. |
| AIDA ENGINEERING, LTD.6118 | 3.8x | -12.1%at 7%–9%: -14% to -11% | 2% | 24% | Three-quarters of sales go to autos, so investors shun it as a casualty of the EV slowdown. | EV capex weakness could thin orders. The backlog fell 14.1% to 54.4bn yen, so the base for future sales is shrinking. If profit has peaked, today's earnings will not last. |
| Bell-Park Co.,Ltd.9441 | 3.8x | -12.0%at 7%–9%: -13% to -11% | 2% | 24% | Nearly 90% of sales depend on one telecom carrier whose contract terms it controls, raising doubts about the company's growth durability. | Despite this year's growth, the company's own forecast projects sales down 7.2%, operating profit down 15.0%, and net profit down 20.1% next year, suggesting the low valuation may already reflect a peak in earnings. |
| DAIICHI JITSUGYO CO., LTD.8059 | 3.8x | -11.9%at 7%–9%: -13% to -11% | 2% | 17% | A trading house riding customers' capex cycles: battery demand collapsed and profit is guided down, so today's earnings look like a peak. | Backlog is shrinking and the company itself guides a profit decline. If today's profit is the peak, the apparent cheapness disappears as earnings fall. |
| SANKYO CO., LTD.6417 | 3.8x | -11.9%at 7%–9%: -13% to -11% | 2% | 17% | Investors stay cautious because pachinko/pachislot sales hinge on hit titles and wary parlors delay new machine purchases. | Recurring profit has already turned down from a peak (74.6bn to 64bn yen), showing the hit-dependent model can shrink further if play activity stays weak. |
| MATSUI CONSTRUCTION CO., LTD.1810 | 3.9x | -11.8%at 7%–9%: -13% to -10% | 2% | 24% | Stable bank and founding-family shareholders, plus an explicitly size-capped "right-sized" growth policy, leave this contractor overlooked. | Ordinary income swung sharply from 2.8bn to 2.7bn to just 0.8bn then up to 3.8bn and 6.2bn, so the recent rebound could prove temporary. |
| transcosmos inc.9715 | 3.9x | -11.8%at 7%–9%: -13% to -10% | 2% | 17% | Closely-held ownership by the founding family and a foundation, plus fears that AI will erode its labor-intensive outsourcing model, keep investors cautious. | Ordinary income fell from ¥28.9bn to as low as ¥13.8bn over five years and has only recovered to ¥19.0bn, so a repeat of that sharp decline cannot be ruled out. |
| ALPHA SYSTEMS INC.4719 | 4.0x | -11.4%at 7%–9%: -13% to -10% | 5% | 35% | Founder family and employee trust hold near-majority control while the firm stays a subcontractor to NTT Data and Fujitsu, so profit growth is not repriced. | Capex is limited to facility maintenance and internal equipment, so profit growth could stall without cash being deployed into expansion. |
| MURAKAMI CORPORATION7292 | 4.0x | -11.2%at 7%–9%: -13% to -10% | 2% | 25% | A tight web of founding-family, regional-bank, and hotel-company shareholders leaves little outside pressure to change capital policy. | Despite growing operating profit, ROE is only 6.6% against cash of ¥46.5bn and equity of ¥98.1bn, showing cash is not translating into returns. |
| ICHIKEN Co., Ltd.1847 | 4.0x | -11.2%at 7%–9%: -13% to -10% | 2% | 25% | Maruhan, a parent-like gaming firm, owns 40% of this commercial-facility contractor, while rising profit hasn't converted into operating cash, worrying investors. | Operating profit rose to 9.0 billion yen, but operating cash flow was negative 3.2 billion yen as receivables surged, a cash-flow strain that buyers focused on earnings growth might overlook. |
| TV TOKYO Holdings Corporation9413 | 4.1x | -10.8%at 7%–9%: -12% to -9% | 2% | 18% | Nikkei's over-30% stake and the structural decline of core terrestrial TV ad revenue keep this holding company's shares depressed. | Cash of about ¥49bn versus only ¥5.6bn of debt and an ROE of 7.4%, still below the 8% target, suggest the cash pile could simply sit idle rather than be deployed productively. |
| DEAR LIFE CO.,LTD.3245 | 4.2x | -10.7%at 7%–9%: -12% to -9% | 3% | 25% | Lumpy property-sale timing and founder-family control make the market treat this real-estate trader's earnings as unreliable. | Ordinary profit has swung roughly 40% year to year, so this year's ¥7.8bn peak may not be sustained. |
| NICHIRIN CO.,LTD.5184 | 4.2x | -10.6%at 7%–9%: -12% to -9% | 3% | 25% | Over 90% auto-dependent, with North American profit hit hard by tariffs, keeps the market wary despite steady group earnings. | Sales have grown for five straight years, yet ordinary profit has declined for two consecutive years, a pattern that could persist. |
| JGC HOLDINGS CORPORATION1963 | 4.2x | -10.5%at 7%–9%: -12% to -9% · EV floored at 30% of market value (else -12%) | 2% | 15% | Middle East conflict and memories of past project losses keep investors wary of unpredictable EPC earnings, so the stock stays unrewarded. | Ordinary profit has swung wildly from ¥30bn to ¥50.6bn to just ¥0.4bn to ¥11.3bn to ¥58.2bn, so the recent high profit may not persist. |
| MEDIKIT CO.,LTD.7749 | 4.2x | -10.3%at 7%–9%: -12% to -9% | 6% | 35% | Founder family control above 40% and a self-funded, conservative policy keep the stock cheap. | Even as sales grew, operating profit fell year-on-year due to rising depreciation from capex, and this profit erosion could continue. |
| ASIA PILE HOLDINGS CORPORATION5288 | 4.4x | -9.8%at 7%–9%: -11% to -8% | 3% | 26% | Cement supplier, banks, and an employee stock plan dominate as stable holders while order-dependent, delay-prone pile-foundation work limits the growth narrative. | Ordinary income swung from 2.2bn to 5.8bn to 6.2bn to 3.9bn to 10.9bn yen over five years, and the recent surge is driven partly by a one-year swing to overseas profitability, leaving room for a sharp pullback. |
| TOKAI RIKA CO.,LTD.6995 | 4.6x | -9.2%at 7%–9%: -11% to -8% | 3% | 16% | Seen as a captive supplier whose profits swing with one automaker's output, not an independent growth story. | The domestic segment's operating loss is widening, and without structural fixes, earning power there may keep deteriorating. |
| TRE HOLDINGS CORPORATION9247 | 4.8x | -8.5%at 7%–9%: -10% to -7% | 3% | 27% | Market treats profits as a fading one-off Noto earthquake cleanup boom, given reliance on construction waste and scrap-price swings. | Ordinary profit already fell 3.1% year on year, and the reversal of the disaster-waste boom could weigh further on results ahead. |
What the price assumes: US
Sorted from the harshest assumption. The bars show how often US companies of the same size did this badly or worse over ten years (shrank at least that fast). Past comparison: sales and operating profit of companies reporting to the SEC under US GAAP, from each start year 2009–2015 to ten years later (last 2025), grouped by sales at the start. Japanese candidates are compared with US companies of the same size in dollars; there is no Japanese equivalent here yet.
| Company | EV/EBIT | Price assumes (op. profit per year) | Same-size US firms with sales growth this low or lower | …with operating profit growth this low or lower | Why it may be cheap (AI) | How a buyer could still lose (AI) |
|---|---|---|---|---|---|---|
| Gap IncGAP · NYSE | 4.0x | -11.6%at 8%–10%: -13% to -10% | 2% | 13% | Low entry barriers, tariff costs, and an unfinished turnaround in apparel retail keep investors wary despite strong headline profits. | Inventory rose 7% while sales grew only 2% in fiscal 2025, a numeric sign of markdown risk that could further erode gross margin. |
| CF Industries Holdings, Inc.CF · NYSE | 6.4x | -4.7%at 8%–10%: -6% to -3% | 8% | 22% | Nitrogen fertilizer is an undifferentiated global commodity that once fell over a third in an oversupply cycle, and new capacity keeps coming online, so the market treats today's high profit as temporary. | Today's 43.5% ROE may reflect a cyclical price peak in a commodity that has fallen 34% per ton before, so profit and cash flow could shrink quickly in a downturn. |
| Sprouts Farmers Market, Inc.SFM · Nasdaq | 6.5x | -4.3%at 8%–10%: -6% to -3% | 9% | 23% | Grocery retail is viewed as a low-margin, economy-sensitive business where shoppers shift to cheaper rivals, capping the valuation. | Cash of $224M against debt of $461M leaves thin liquidity to keep funding the aggressive store-opening pace. |
| Macy's, Inc.M · NYSE | 6.7x | -3.9%at 8%–10%: -5% to -2% | 9% | 20% | Macy's ongoing closure of unproductive stores keeps the market viewing it as a structurally declining department-store chain, not worth re-rating. | The Piotroski F-score is a high 8/9, but the asset-turnover-improvement criterion is not met, suggesting store closures may be flattering the metric via a shrinking asset base rather than real efficiency gains. |
| Aptiv PLCAPTV · NYSE | 6.9x | -3.4%at 8%–10%: -5% to -2% | 11% | 21% | Seen as a car-parts maker whose earnings swing with the auto production cycle and tariffs. | Operating cash flow is well below operating profit, and debt far exceeds cash. If inventory stays high and car output falls, profit may not turn into cash and the debt load would show. |
| Stride, Inc.LRN · NYSE | 6.9x | -3.4%at 8%–10%: -5% to -2% | 11% | 26% | Dependence on per-pupil government funding and lawsuits from charter-school opponents keep this for-profit online education firm under a market discount. | Despite buybacks, share count is on an increasing trend, a sign that per-share value may be diluted even as the business looks efficient. |
| EXPAND ENERGY CorpEXE · NasdaqPossible one-off profitShare dilution | 7.1x | -3.2%at 8%–10%: -5% to -2% | 11% | 22% | Volatile natural gas prices and a still-digesting merger keep the market cautious on this producer. | Recent operating profit is more than double the past three-year average, so earnings could revert if gas prices normalize. |
| Academy Sports & Outdoors, Inc.ASO · Nasdaq | 7.7x | -1.8%at 8%–10%: -3% to -0% | 14% | 28% | Market doubts earnings durability given Academy's Southern US concentration and tariff-driven consumer spending pressure, capping its valuation. | Sales and profit are already declining; if this continues rather than reversing, the earnings base behind the 'cheap' multiple itself shrinks. |
| ANTERO RESOURCES CorpAR · NYSEPossible one-off profit | 7.9x | -1.5%at 8%–10%: -3% to +0% | 15% | 29% | Market stays cautious due to dependence on affiliate Antero Midstream and volatile gas prices. | A flag notes recent operating income is more than double the 3-year average, coinciding with realized gas prices jumping from $3.29 to $3.99, suggesting a possibly temporary boost. |
| Ingredion IncINGR · NYSE | 8.1x | -1.2%at 8%–10%: -3% to +0% | 16% | 30% | Seen as a commodity processor whose sales swing with raw material pass-through, so investors see no distinct growth story. | The only unmet Piotroski criterion is asset turnover improvement, hinting capital efficiency gains may be stalling despite strong earnings. |
| Cognizant Technology Solutions CorpCTSH · Nasdaq | 8.3x | -0.9%at 8%–10%: -2% to +1% | 23% | 28% | Clients keep insourcing IT work via their own global capability centers, so the market doubts Cognizant can hold pricing power. | Despite a high Piotroski F-score of 8/9, the one unmet criterion is year-over-year ROA improvement, suggesting profitability gains may be stalling. |
| Skywest IncSKYW · Nasdaq | 8.4x | -0.6%at 8%–10%: -2% to +1% | 18% | 32% | Market discounts SkyWest as a subcontractor to major airlines, controlling neither pricing nor routes on most flights. | With $2.3B in borrowings against just $345M cash, enterprise value is 1.5x market cap; the leverage behind the seemingly safe fixed-fee model could surface as fragility. |
| Signet Jewelers LtdSIG · NYSE | 8.6x | -0.3%at 8%–10%: -2% to +1% | 20% | 32% | Unit sales keep falling even as gold-driven prices rise, and heavy reliance on consumer credit makes discretionary jewelry demand look fragile. | AUR gains are driven mainly by higher gold prices, while unit volumes keep declining—if price gains stall, there is no underlying volume support. |
| Maximus, Inc.MMS · NYSE | 8.7x | -0.2%at 8%–10%: -2% to +1% | 21% | 32% | Heavy reliance on government clients whose payment delays force more borrowing keeps investors wary despite solid profits. | With only $57M cash against $1.64B of debt, most of enterprise value is debt, leaving the company exposed to rising rates or tougher refinancing conditions. |
| Universal Health Services IncUHS · NYSE | 8.7x | -0.1%at 8%–10%: -2% to +1% | 29% | 31% | Heavy dependence on Medicare/Medicaid and a persistent regulatory-litigation overhang keep the market from rewarding UHS's solid earnings. | Cash of $138.8M versus borrowings of $4,851.8M — about 35x — leaves little financial cushion. |
| PayPal Holdings, Inc.PYPL · Nasdaq | 9.1x | +0.5%at 8%–10%: -1% to +2% | 30% | 35% | Falling transaction counts and repeated executive turnover leave the market uneasy about growth momentum and governance stability. | Cash and debt are nearly equal in size, so the balance sheet has less real cushion than it appears. |
| Comcast CorpCMCSA · Nasdaq | 9.2x | +0.7%at 8%–10%: -1% to +2% | 39% | 36% | Investors treat Comcast as a legacy broadband and pay-TV firm whose core subscriber base keeps shrinking despite wireless growth. | — |
| Urban Outfitters IncURBN · Nasdaq | 9.4x | +0.9%at 8%–10%: -1% to +2% | 27% | 35% | Founder-family executives repeatedly set up large stock-sale plans, so the market discounts shares for anticipated insider selling. | The one Piotroski criterion the company fails is a year-over-year decline in leverage, suggesting debt reliance may be quietly increasing behind shareholder returns or investment. |
| Asbury Automotive Group IncABG · NYSE | 9.5x | +1.1%at 8%–10%: -1% to +3% | 41% | 36% | Debt-funded acquisition spree and cyclical new-vehicle sales keep the market wary of this dealership roll-up. | Cash of only $35.7M against $3.46B of debt means a downturn or rate rise could strain finances heavily. |
| Kbr, Inc.KBR · NYSE | 9.6x | +1.3%at 8%–10%: -0% to +3% | 29% | 37% | Heavy reliance on U.S. government contracts, plus an unresolved Mission Technology spin-off, keeps investors cautious about KBR. | After the spin-off, both companies may face stranded costs and lost scale, causing operating expenses to run higher than planned and eroding current profit levels. |
| Korn FerryKFY · NYSE | 9.6x | +1.3%at 8%–10%: -0% to +3% | 27% | 37% | Low entry barriers and AI-driven rivals in recruiting keep the market wary of Korn Ferry's earnings quality. | The $384.7 million operating profit rests on cyclical hiring-driven executive search revenue, which could shrink quickly if hiring cools. |
| Hess Midstream LPHESM · NYSE | 9.7x | +1.4%at 8%–10%: -0% to +3% | 28% | 37% | Market discounts it because revenue hinges entirely on parent Chevron's single-basin Bakken production volumes. | With borrowings of $3.68B against only $5M cash and thin equity of $514.6M, the company has little buffer if production volumes decline. |
| Genpact LTDG · NYSE | 9.8x | +1.5%at 8%–10%: -0% to +3% | 30% | 38% | Market views this GE-spinoff labor-intensive BPO as a business AI will replace, not one that wins from it. | With debt of $1,180 million against cash of only $517 million, if AI-driven demand erosion hits this labor-intensive model, profitability could shrink while leverage remains. |
| Adobe Inc.ADBE · Nasdaq | 9.9x | +1.7%at 8%–10%: -0% to +3% | 47% | 40% | Fear that generative-AI rivals will erode Adobe's creative-software moat keeps the stock cheap despite ongoing revenue growth. | With ROE at 61.9% built on thin equity of $11.76B, the 7.8x price-to-book multiple could compress sharply if core-business growth merely slows. |
| First Solar, Inc.FSLR · Nasdaq | 10.1x | +2.0%at 8%–10%: +0% to +4% | 34% | 39% | Market doubts profits propped up by tax-credit sales, fearing policy shifts could swing earnings and capping the stock. | In 2025 the company sold $1.4B of Section 45X tax credits for cash, meaning much of its $1.8B operating income may reflect policy-driven proceeds rather than core pricing power. |
| Open Text CorpOTEX · Nasdaq | 10.2x | +2.1%at 8%–10%: +0% to +4% | 34% | 40% | Debt-funded acquisitions and an unfinished cleanup of non-core businesses keep the market wary of this legacy software roll-up. | Borrowings of $5.77B against just $956M cash mean net debt makes up nearly half of the $10.2B enterprise value, so any earnings slowdown would hit equity value disproportionately. |
| Lci IndustriesLCII · NYSE | 10.2x | +2.1%at 8%–10%: +0% to +4% | 34% | 40% | Market treats it as a cyclical parts supplier exposed to discretionary RV demand and dealer floor-plan financing swings. | Cash of $221.5M against debt of $852.6M means a downturn could hit earnings harder given the leverage. |
| EQT CorpEQT · NYSE | 10.3x | +2.3%at 8%–10%: +1% to +4% | 36% | 41% | Investors treat strong earnings as a temporary natural-gas price windfall rather than durable profitability, so valuation stays capped. | The only Piotroski F-score failure is rising share count; continued share issuance could dilute per-share value even as headline multiples look cheap. |
| United Airlines Holdings, Inc.UAL · Nasdaq | 10.3x | +2.3%at 8%–10%: +1% to +4% | 50% | 45% | Labor negotiation risk and a fleet buildout through 2034 make investors doubt cash will stay with shareholders. | With $26.464B of debt against only $16.637B cash while aircraft investment continues, there is little cushion if a downturn hits. |
| Phinia Inc.PHIN · NYSE | 10.5x | +2.6%at 8%–10%: +1% to +4% | 38% | 42% | Seen as a fuel-injection business fading with electrification; a young spin-off whose long-term demand is hard to read. | If electrification outpaces expectations, core demand shrinks first. Alternative fuels are early-stage with no guaranteed acceptance or returns, so today's profit may not last. |
| Oceaneering International IncOII · NYSE | 10.6x | +2.7%at 8%–10%: +1% to +4% | 36% | 41% | Most revenue comes from oil and gas, so the market treats it as a cyclical stock exposed to energy-price swings and decarbonization headwinds. | If current profit is near a cyclical peak, a drop in oil prices or customer spending would cut earnings, and what looked cheap would have been a high. The company itself warns its expectations may be wrong. |
| Autoliv IncALV · NYSE | 10.7x | +2.8%at 8%–10%: +1% to +4% | 58% | 50% | Market treats Autoliv as a cyclical auto supplier exposed to volatile customer call-offs and uncertain tariff cost recovery. | With equity of $2.49B against debt of $2.04B, the high 25.8% ROE is heavily leverage-driven, so an LVP downturn could hit equity disproportionately. |
| Leidos Holdings, Inc.LDOS · NYSE | 10.8x | +2.9%at 8%–10%: +1% to +4% | 58% | 50% | Market discounts Leidos as budget cuts or contract terminations could hit the 87% of revenue tied to U.S. government spending. | The Piotroski check shows the leverage ratio did not improve year over year, meaning debt has grown; if government budgets tighten, repayment burden could weigh more heavily. |
| Cirrus Logic, Inc.CRUS · Nasdaq | 11.3x | +3.5%at 8%–10%: +2% to +5% | 41% | 44% | Market distrusts growth durability due to heavy smartphone-audio reliance and a no-dividend, discretionary buyback-only policy. | The ~23% operating margin (operating income $472M on revenue $2,050M) rests on a business concentrated in smartphone audio/HPMS; if a key customer's design choices shift, this margin could compress sharply, making today's apparent cheapness justified by a later earnings collapse rather than a bargain. |
| Weatherford International plcWFRD · Nasdaq | 11.3x | +3.5%at 8%–10%: +2% to +5% | 45% | 46% | Wariness over the oilfield-services cycle—falling oil prices and rig counts—restrains its valuation despite strong earnings. | With borrowings of $1.48 billion against net worth of only $1.788 billion, a continuation of the disclosed oil-price and rig-count downturn could amplify earnings declines through leverage. |
| Black Stone Minerals, L.P.BSM · NYSE | 11.3x | +3.6%at 8%–10%: +2% to +5% | 37% | 48% | Payouts swing with oil and gas prices, so investors don't trust the earnings to last. | If oil falls again, the revenue and profit decline deepens and distributions could be cut. Cash spent on acquisitions also reduces what is left for payouts. |
| Seaboard Corp /De/SEB · NYSEPossible one-off profit | 11.5x | +3.8%at 8%–10%: +2% to +5% | 66% | 56% | A multi-segment commodity conglomerate (pork, grain, shipping) whose cyclical, tariff-exposed earnings keep valuation subdued. | Recent operating income is more than double the 3-year average, so if the boost proves temporary, the low P/E could be illusory once earnings normalize. |
| Gen Digital Inc.GEN · Nasdaq | 11.5x | +3.9%at 8%–10%: +2% to +6% | 48% | 47% | Heavy debt and dependence on Broadcom for critical tech keep the market wary despite strong profitability. | With borrowings of $8,156M against only $1,006M cash, net debt rivals the market cap, leaving little room if rates rise or performance weakens. |
| ADT Inc.ADT · NYSE | 11.6x | +3.9%at 8%–10%: +2% to +6% | 48% | 47% | Having shed its commercial and solar units, the firm now reads as a shrinking single-segment business rather than a growth story. | Cash of only $3.9M against roughly $7.69B of borrowings means a worsening rate environment could squeeze earnings through refinancing costs. |
| Boot Barn Holdings, Inc.BOOT · NYSE | 11.8x | +4.2%at 8%–10%: +2% to +6% | 47% | 46% | Market still discounts this western/workwear specialist despite its claim of being fashion-cycle resistant. | Because over 30% of sales concentrate in Q3, a consumer slowdown could hit that single quarter hard and push an already-cheap stock lower still. |
| Best Buy Co IncBBY · NYSE | 12.4x | +4.9%at 8%–10%: +3% to +7% | 72% | 60% | Best Buy's tariff-exposed electronics supply chain and limited pricing power leave investors doubting the durability of its earnings. | Equity is just $3.18B, close to $1.17B of debt, so the high ROE reflects a thin equity base rather than exceptional earning power. |
How often do companies shrink? US companies over ten years
Share of ten-year stretches in which sales or operating profit fell at least this much per year. A company whose operating profit turned into a loss counts as the worst case. Companies without figures ten years later (taken over, bankrupt or delisted) are left out; a stretch is counted for each start year, so one company can appear up to seven times.
| Sales at the start | Companies | Median sales growth | Sales -5%/yr or worse | Sales -10%/yr or worse | Sales -20%/yr or worse | Op. profit -5%/yr or worse | Op. profit -10%/yr or worse | Op. profit -20%/yr or worse |
|---|---|---|---|---|---|---|---|---|
| under $0.1bn | 1,313 | +6.6% | 18% | 12% | 6% | 54% | 50% | 45% |
| $0.1–0.3bn | 669 | +6.8% | 10% | 6% | 2% | 40% | 35% | 32% |
| $0.3–1bn | 806 | +5.7% | 6% | 3% | 1% | 31% | 26% | 21% |
| $1–3bn | 697 | +4.6% | 8% | 3% | 1% | 23% | 18% | 14% |
| $3–10bn | 497 | +4.2% | 8% | 2% | 0% | 21% | 16% | 11% |
| $10–30bn | 228 | +1.9% | 7% | 3% | 1% | 18% | 14% | 9% |
| $30–100bn | 85 | +2.4% | 4% | 1% | 0% | 15% | 10% | 8% |
| $100bn+ | 24 | +2.3% | 15% | 3% | 0% | 17% | 8% | 5% |
How it is calculated
- The calculation
- Enterprise value (market value + debt − cash) = the next ten years of after-tax operating profit, discounted, + the value after year ten. After-tax operating profit is operating profit × (1 − 30% in Japan, 21% in the US). We solve for the yearly rate of change that makes the two equal.
- Assumptions
- Discount rate 8% in Japan and 9% in the US (long-term interest rate plus about 5–6 points for equity risk); the tables also show ±1 point. Margins stay where they are, so sales change at the same rate. All after-tax operating profit can be paid out. After year ten, profit stays flat (value after year ten = profit in year ten ÷ discount rate).
- Why operating profit, not net profit
- Enterprise value belongs to both shareholders and lenders, so it is set against profit before interest. As on the candidate pages, enterprise value is not taken below 30% of market value; where that floor applies, the unfloored figure is also shown.
- Limits
- A single rate over ten years is a simplification: the market may instead expect a sharp fall followed by stability. Where this year’s profit is inflated by one-off items, the ‘shrinkage’ may just be a return to normal. Cash-rich Japanese companies are often priced as if their cash were worth less than face value, which this calculation reads as shrinking profit. The past comparison uses only US companies, over a single period starting after 2008.
The same check on AI leaders: what growth their prices assume →
This site ranks companies whose share price is low relative to their profits, using public filings and market prices, and has AI draft hypotheses on why they are cheap from those filings. The hypotheses are unverified. Nothing here is a price forecast or a recommendation to buy or sell. Not investment advice.
Updated 10 Nov 2026 08:40 JST