Sumitomo Bakelite stock came into this earnings print on a strong three month run, with the share price up about 37% over that period and closing at ¥7,445 on 4 August. The short term trade has been focused on momentum. The headline from the actual results is that earnings power is catching up to that optimism. First quarter basic earnings per share of ¥124.61 sit on top of a trailing twelve month figure of ¥359.17 and a trailing net margin of 9.3%.

The market is now weighing that increase in profitability against a richer P/E and a price already above one discounted cash flow estimate.

Is Sumitomo Bakelite now priced for perfection, or is the market overreacting to a strong quarter and richer P/E multiple? Compare the current share…