Nidec Corp's Undervalued Opportunity: A Strategic Buyback Window Closing Soon

Nidec Corporation (6594.T), a global leader in motor technology and precision machinery, is currently operating under a share buyback program that underscores its confidence in its stock's undervaluation. With a strategic capital allocation approach that prioritizes shareholder value, Nidec's underutilized buyback authority presents a rare opportunity for investors to act before the program expires on May 26, 2025.

The Buyback Program: A Barometer of Undervaluation

Nidec's Board of Directors authorized a share repurchase program in July 2024, permitting the company to buy up to 10 million shares (0.87% of total shares) or spend up to ¥35 billion by May 2025. However, as of April 30, 2025, the company had repurchased only 2.92 million shares at a total cost of ¥7.77 billion—a mere 22% of the allocated funds. Notably, no shares were repurchased in April 2025, signaling a strategic pause or market conditions that have kept the stock price at a compelling entry point.

This underutilization is a stark indicator that Nidec management views its shares as undervalued. The program's remaining capacity—¥27.23 billion unspent—suggests either a deliberate wait for a lower price or a market environment where the stock is already trading below intrinsic value. Either way, investors can capitalize on the same valuation discipline driving Nidec's buyback decisions.

Why Nidec's Capital Allocation Signals Opportunity

1. Strategic Focus on Core Value:
   Nidec's withdrawal of a tender offer for Makino Milling Machine Co. (7185.T) in May 2025 highlights its prioritization of capital toward high-ROI initiatives. With automation and energy-efficient technologies driving demand for Nidec's motors, the company is aligning resources with its core strengths, a move that bodes well for long-term shareholder returns.

2. Undervalued Metrics:
   Nidec trades at 14.2x trailing P/E, below its 5-year average of 16.8x, despite consistent revenue growth and a robust order backlog in EV and robotics sectors. The company's ROE of 18% and dividend yield of 1.5% further reinforce its undervaluation relative to peers.

3. Catalyst for Revaluation:
   The impending expiration of the buyback program creates urgency. Should Nidec's management decide to accelerate repurchases in the final days, it could trigger a sharp rebound in stock price. Even without immediate buybacks, the undervaluation gap will eventually close as the market recognizes Nidec's leadership in high-growth industries like EVs and industrial automation.

Act Now: The Closing Window

The data is clear: Nidec's buyback program has been underutilized not because of a lack of funds, but because the stock's current price is already attractive to management. Investors should act swiftly to secure positions before the following catalysts materialize:
- Post-buyback program revaluation: As the program expires, the remaining cash allocation could signal undervaluation to market participants.
- EV and robotics sector tailwinds: Nidec's motor technology is a critical component in these booming markets, with 20%+ annual revenue growth expected in these segments.
- Balance sheet flexibility: With net cash reserves and a conservative debt structure, Nidec retains ample firepower for further buybacks or strategic moves post-May 2025.

Final Call to Action

Nidec Corp's share buyback program—despite its underutilization—is a red flag that the market has yet to recognize its true value. With a stock price hovering at multi-year lows relative to fundamentals, this is a buy-and-hold opportunity for investors seeking exposure to a tech-driven industrial giant. The window to act is narrowing; the expiration date looms, and the next strategic move from Nidec's management could ignite a sharp rebound.

Invest now before the market catches up.