Disco (DSCSY) AI Stock Analysis

• Market Cap: $46.38B
• Dividend Yield: 0.78%
• Average Volume (3M): 52.38K
• Price to Earnings (P/E): 53.2
• Beta (1Y): 1.39
• Revenue Growth: 14.11%
• EPS Growth: 20.86%
• Country: US
• Employees: 4,886
• Sector: Technology
• Sector Strength: 88
• Industry: Semiconductors
• EPS (TTM): 0.22
• Shares Outstanding: 1,084,465,300
• 10 Day Avg. Volume: 66,218
• 30 Day Avg. Volume: 52,380
• PEG Ratio: 0.56
• Price to Book (P/B): 6.66
• Price to Sales (P/S): 8.33
• P/FCF Ratio: 61.34
• Enterprise Value/Market Cap: 149.44
• Enterprise Value/Revenue: 17.31
• Enterprise Value/Gross Profit: 24.65
• Enterprise Value/Ebitda: 39.27
• 1Y Price Target: N/A
• Price Target Upside: N/A
• Rating Consensus: N/A
• Number of Analyst Covering: 0
• EPS Forecast (FY): N/A
• Revenue Forecast (FY): N/A

• Rating: 79 Outperform
• Price Target: $49.00 ▲(40.72% Upside)

The score is driven primarily by outstanding financial performance (best-in-class margins and a zero-debt balance sheet). Technicals are supportive but overbought signals add near-term risk, and valuation is the main drag due to a very high P/E and modest dividend yield.

Positive Factors

Pristine Balance Sheet

Zero total debt and steadily rising equity give Disco durable financial flexibility to fund R&D, capex, and global service expansion without leverage. This solvency profile improves resilience during semiconductor cycles and enables long-term support for the installed base and consumables growth.

High and Improving Margins

Sustained margin expansion and a very high EBIT margin (~42% in 2025) indicate pricing power and operational efficiency. Durable margins support reinvestment in product development and service infrastructure, helping maintain profitability across product cycles and fund long-term initiatives.

Recurring Consumables & Services

The pull-through model—consumables, spare parts, and service tied to an installed equipment base—creates recurring revenue that smooths cyclicality of one-time equipment sales. This sticky after-sales stream supports steady margins, customer retention, and predictable long-term cash generation.

Negative Factors

Cash Conversion Volatility

Operating cash consistently trailing net income and volatile free cash flow imply working-capital swings and timing-driven cash variability. That unpredictability can constrain reinvestment pacing, capital return programs, and the company’s ability to fund growth consistently despite strong accounting earnings.

Revenue Cyclicality

Large swings in revenue year-to-year reflect high sensitivity to semiconductor capital spending and technology cycles. Such cyclicality reduces predictability of orders and margins, complicates capacity planning, and raises execution risk during downturns for equipment-centric businesses.

Concentrated End-Market Exposure

Deep specialization in semiconductor back-end equipment, blades, and grinding consumables focuses Disco’s addressable market. This concentration increases exposure to demand swings in a narrow set of end-markets and to technology shifts (e.g., packaging approaches) that could materially alter long-term demand.

Disco Business Overview & Revenue Model

Company Description

Disco Corporation manufactures and sells precision cutting, grinding, and polishing machines in Japan and internationally. The company's precision machines include dicing saws, laser saws, grinders, polishers, wafer mounters, die separators, surface planers, and waterjet saws, as well as products for dicing before grinding process and package singulation. It also offers precision processing tools comprising dicing blades, grinding wheels, and dry polishing wheels; and other products, such as accessory equipment, as well as frames and cassettes, and additives for cutting waters. In addition, the company is involved in the disassembly and recycling of precision cutting, grinding, and polishing machines, as well as provides training services for the maintenance and operation of its products. Further, it leases precision machines; and purchases and sells used machines. The company was founded in 1937 and is headquartered in Tokyo, Japan.

How the Company Makes Money

Disco Corporation generates revenue primarily through the sale of its precision semiconductor manufacturing equipment. Its key revenue streams include the sales of dicing saws, grinders, and other specialized machinery used in the semiconductor industry. In addition to equipment sales, Disco also earns revenue from providing maintenance services, spare parts, and customer support for the equipment it sells. The company benefits from long-term relationships with leading semiconductor manufacturers, which often require regular upgrades and replacements of equipment, contributing to consistent revenue flow. Furthermore, Disco's focus on innovation and technological advancement helps maintain its competitive edge, allowing it to leverage industry growth and demand for more advanced semiconductor manufacturing solutions.

Disco Financial Statement Overview

Summary

Exceptional profitability and improving margins (gross margin ~58% to ~71%; net margin ~21% to ~31%), with very strong 2025 revenue acceleration and high EBIT margin (~42%). Balance sheet is pristine with zero debt and rising equity, though cash-flow conversion vs. earnings is mixed and free-cash-flow consistency is volatile.

Income Statement

Profitability is exceptionally strong and improving: gross margin expanded from ~58% (2021) to ~71% (2025), while net margin rose from ~21% to ~31%. Revenue has grown substantially over the period (2020–2025), with a particularly strong acceleration into 2025 (annual revenue growth ~436%), and operating profitability remains very high (EBIT margin ~42% in 2025). The main watch-out is cyclicality/volatility in growth—2024 showed near-flat revenue growth (~8%) before the sharp rebound in 2025.

Balance Sheet

Balance sheet quality is outstanding: the company reports zero total debt across all periods, resulting in no leverage pressure and high financial flexibility. Equity steadily increased (from ~226,752B in 2020 to ~492,352B in 2025), and returns on shareholders’ capital are consistently strong (roughly 12%–25% range, ~25% in 2025). The key limitation is that with no additional liquidity or working-capital detail provided, short-term balance sheet resilience can’t be fully assessed, but overall solvency and capital strength look excellent.

Cash Flow

Cash generation is solid and improving overall, with operating cash flow rising meaningfully (from ~31,299B in 2020 to ~120,364B in 2025) and free cash flow rebounding sharply in 2025 (growth ~126%). However, cash conversion is mixed: operating cash flow runs below net income in each year shown (about 66%–76% of net income), and free cash flow as a share of net income is volatile (as low as ~20% in 2020 and ~44% in 2025, after being very strong in 2023–2024). This points to periodic working-capital or investment swings that can make cash results less predictable year to year.

Breakdown	TTM	Dec 2025	Dec 2024	Dec 2023	Dec 2022	Dec 2021
Income Statement
Total Revenue	400.43B	393.31B	307.55B	284.13B	253.78B	182.86B
Gross Profit	281.13B	277.57B	208.64B	184.47B	153.97B	106.83B
EBITDA	176.48B	179.03B	132.52B	120.75B	100.02B	59.87B
Net Income	123.94B	123.89B	84.20B	82.89B	66.21B	39.09B
Balance Sheet
Total Assets	620.08B	654.09B	556.06B	472.69B	404.54B	329.03B
Cash, Cash Equivalents and Short-Term Investments	198.50B	229.17B	215.49B	163.05B	125.77B	109.81B
Total Debt	0.00	0.00	0.00	0.00	0.00	0.00
Total Liabilities	135.16B	161.39B	149.50B	124.65B	110.73B	76.67B
Stockholders Equity	484.62B	492.35B	406.37B	347.80B	293.54B	252.14B
Cash Flow
Free Cash Flow	0.00	53.43B	81.27B	67.53B	40.02B	35.60B
Operating Cash Flow	0.00	120.36B	97.52B	81.78B	83.65B	56.71B
Investing Cash Flow	0.00	-68.00B	-16.40B	-13.08B	-43.59B	-13.11B
Financing Cash Flow	0.00	-38.15B	-30.94B	-32.09B	-27.19B	-15.82B

Disco Technical Analysis

• Technical Analysis Sentiment: Positive
• Last Price: 34.82
• 50DMA: Positive
• 100DMA: Positive
• 200DMA: Positive
• MACD: Negative
• RSI: Neutral
• STOCH: Negative

Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For DSCSY, the sentiment is Positive. The current price of 34.82 is below the 20-day moving average (MA) of 38.54, above the 50-day MA of 33.15, and above the 200-day MA of 29.14, indicating a bullish trend. The MACD of 3.33 indicates Negative momentum. The RSI at 66.51 is Neutral, neither overbought nor oversold. The STOCH value of 81.78 is Negative, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Positive sentiment for DSCSY.

Disco Peers Comparison

Name	Overall Rating	Market Cap	P/E Ratio	ROE	Dividend Yield	Revenue Growth	EPS Growth
DSCSY	79 Outperform	$46.38B	53.20	27.55%	0.78%	14.11%	20.86%
ON	73 Outperform	$24.10B	78.15	3.87%	―	-16.13%	-81.06%
ASX	69 Neutral	$41.11B	38.08	11.16%	2.29%	8.01%	10.41%
STM	64 Neutral	$25.21B	146.33	0.93%	1.28%	-17.33%	-76.71%
GFS	63 Neutral	$23.45B	-506.00	-0.38%	―	0.25%	-106.22%
MCHP	62 Neutral	$41.03B	-168.11	-2.85%	2.79%	-23.36%	-131.15%
Sector *	61 Neutral	$37.18B	12.37	-10.20%	1.83%	8.50%	-7.62%