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Disco
(OTC:DSCSY)
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Rating:69Neutral
Price Target:
$44.00
▲(18.31% Upside)
Action:Downgraded
Date:07/31/26
High score for financial performance—elite margins, strong ROE, and a debt-free balance sheet—drives the overall result. This is meaningfully offset by weak technical positioning (price far below major moving averages) and a demanding valuation (P/E ~41) with only a modest dividend yield.
Positive Factors
High Profitability Margins
Sustained, industry-leading margins indicate strong unit economics and a scalable software model. High gross and operating margins provide structural operating leverage, enabling durable reinvestment in product, go-to-market, and R&D while protecting long-term cash generation even if growth slows.
Negative Factors
Uneven Revenue Growth Cadence
Irregular growth history suggests demand cyclicality or episodic deal timing, which can make multi-period revenue predictability and planning harder. For a subscription business, uneven top-line trends increase the challenge of sustaining investment levels while preserving margins over the medium term.
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Positive Factors
Negative Factors
High Profitability Margins
Sustained, industry-leading margins indicate strong unit economics and a scalable software model. High gross and operating margins provide structural operating leverage, enabling durable reinvestment in product, go-to-market, and R&D while protecting long-term cash generation even if growth slows.
Read all positive factors
Disco (DSCSY) vs. SPDR S&P 500 ETF (SPY)
Market Cap
$44.82B
Dividend Yield0.69%
Average Volume (3M)102.64K
Price to Earnings (P/E)48.6
Beta (1Y)1.12
Revenue Growth11.66%
EPS Growth14.30%
CountryUS
Employees5,547
SectorTechnology
Sector Strength88
IndustrySemiconductors
Share Statistics
EPS (TTM)136.92
Shares Outstanding1,084,867,300
10 Day Avg. Volume185,371
30 Day Avg. Volume102,635
Financial Highlights & Ratios
PEG Ratio3.04
Price to Book (P/B)11.85
Price to Sales (P/S)15.10
P/FCF Ratio67.44
Enterprise Value/Market Cap<0.01
Enterprise Value/Revenue<0.01
Enterprise Value/Gross Profit<0.01
Enterprise Value/Ebitda<0.01
Forecast
1Y Price TargetN/A
Price Target UpsideN/A
Rating ConsensusN/A
Number of Analyst Covering0
EPS Forecast (FY)N/A
Revenue Forecast (FY)N/A
Disco Business Overview & Revenue Model
Company Description
Disco Corporation, founded in 1937 and headquartered in Tokyo, Japan, is a global leader in the manufacturing and distribution of sophisticated machinery for precision cutting, grinding, and polishing. Its comprehensive range of high-precision equ...
How the Company Makes Money
CS Disco primarily makes money by selling access to its cloud software platform (software-as-a-service), typically through subscription-based arrangements that grant customers the right to use its eDiscovery and legal review tools. In addition to ...
Disco Earnings Call Summary
Earnings Call Date:Jul 23, 2026
(Q1-2026)
| % Change Since: |
Next Earnings Date:Oct 22, 2026
Earnings Call Sentiment Neutral
The call presented a mix of strong near-term operational achievements—most notably a record JPY111.1 billion quarter, significant generative AI- and memory-led IC strength, OSAT improvement, and stable high gross margins when adjusted for FX—alongside meaningful near-term risks: expected Q2 timing-related shipment decline, weakness in power semiconductors and SiC consumables, FX-driven margin pressure, and reduced visibility for H2/Q4 due to shorter customer forecasts. Advanced technology pipelines (hybrid bonding, PLP) show progress but are not yet material to revenue.Positive Updates
Record Quarterly Shipments
Q1 shipments reached JPY111.1 billion, a quarterly record and well above external forecasts. Company upward revised near-term shipments by about JPY9 billion (over JPY5 billion for machinery & equipment and about JPY3 billion for other products). A prior JPY5 billion backlog from Q4 was largely caught up (JPY3 billion recorded in Q1, ~JPY2 billion expected in Q2).
Negative Updates
Q2 Shipment Timing and Expected Sequential Decline
Management expects Q2 shipments to decline relative to Q1 largely due to timing (advance shipments concentrated in Q1 and a reactionary Q2). While underlying demand for generative AI is not judged to be slowing materially, timing volatility may produce a weaker Q2.
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Q1-2026 Updates
Positive
Negative
Record Quarterly Shipments
Q1 shipments reached JPY111.1 billion, a quarterly record and well above external forecasts. Company upward revised near-term shipments by about JPY9 billion (over JPY5 billion for machinery & equipment and about JPY3 billion for other products). A prior JPY5 billion backlog from Q4 was largely caught up (JPY3 billion recorded in Q1, ~JPY2 billion expected in Q2).
Read all positive updates
Company Guidance
The company gave guidance that Q1 shipments were a record JPY111.1bn and management raised its external outlook by about JPY9bn (≈+JPY5bn for machinery & equipment and ≈+JPY3bn for other products), noting some projects were pulled into Q1 (including evaluation machines contributing just over JPY4bn) and that a prior Q4 delay of JPY5bn was split roughly JPY3bn into Q1 and JPY2bn into Q2. By application, Q1 memory was just over 40% (DRAM:NAND roughly 60–70:30–40), OSAT about 30%, and power semiconductors under 10% (SiC single‑digit); for Q2 management expects memory ~35%, OSAT <30% and power <10%. Profitability: Q1 gross margin was 68.1% (would be ~70% at last year’s JPY158/USD vs actual Q1 FX JPY144), the company assumes JPY135/USD for Jul–Sep and sees GP down by less than 2 percentage points in Q2; SG&A for Jul–Sep is guided at about JPY27bn (Q1 SG&A ≈JPY26.7bn). Operationally, generative‑AI/HBM drove the Q1 IC strength, consumable demand (notably SiC) is down YoY but plant activity remains generally busy, North America accounts for ~10% of projects, and management expects a timing‑driven Q2 dip with Q3 likely a bit stronger but H2 (especially Q4) still uncertain.Disco Financial Statement Overview
Summary
Income Statement
92
Very Positive
Balance Sheet
95
Very Positive
Cash Flow
84
Very Positive
| Breakdown | TTM | Mar 2026 | Mar 2026 | Mar 2025 | Mar 2024 | Mar 2023 |
|---|---|---|---|---|---|---|
Income Statement | ||||||
| Total Revenue | 469.03B | 463.24B | 393.31B | 307.55B | 284.13B | 253.78B |
| Gross Profit | 331.25B | 323.93B | 277.57B | 208.64B | 184.47B | 153.97B |
| EBITDA | 218.05B | 210.83B | 179.03B | 132.52B | 120.75B | 100.02B |
| Net Income | 148.44B | 143.70B | 123.89B | 84.20B | 82.89B | 66.21B |
Balance Sheet | ||||||
| Total Assets | 746.20B | 746.63B | 654.09B | 556.06B | 472.69B | 404.54B |
| Cash, Cash Equivalents and Short-Term Investments | 282.02B | 285.81B | 229.17B | 215.49B | 163.05B | 125.77B |
| Total Debt | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 |
| Total Liabilities | 167.52B | 155.96B | 161.39B | 149.50B | 124.65B | 110.73B |
| Stockholders Equity | 578.33B | 590.31B | 492.35B | 406.37B | 347.80B | 293.54B |
Cash Flow | ||||||
| Free Cash Flow | 0.00 | 103.73B | 53.43B | 81.27B | 67.53B | 40.02B |
| Operating Cash Flow | 0.00 | 141.60B | 120.36B | 97.52B | 81.78B | 83.65B |
| Investing Cash Flow | 0.00 | -143.96B | -68.00B | -16.40B | -13.08B | -43.59B |
| Financing Cash Flow | 0.00 | -47.75B | -38.15B | -30.94B | -32.09B | -27.19B |
Disco Peers Comparison
UnderperformOutperform
Sector (61)
Name | Overall Rating | Market Cap | P/E Ratio | ROE | Dividend Yield | Revenue Growth | EPS Growth |
|---|---|---|---|---|---|---|---|
69 Neutral | $44.82B | 48.64 | 26.19% | 0.76% | 11.66% | 14.30% | |
67 Neutral | $31.75B | 52.32 | 8.38% | ― | -3.14% | 44.55% | |
67 Neutral | $28.91B | 41.98 | 6.07% | 0.22% | 1.40% | ― | |
64 Neutral | $42.19B | 109.70 | 6.90% | 2.31% | 20.93% | ― | |
61 Neutral | $37.18B | 12.37 | -10.20% | 1.83% | 8.50% | -7.62% | |
56 Neutral | $49.15B | 101.93 | 2.66% | 0.70% | 10.06% | -27.68% | |
53 Neutral | $85.97B | 44.28 | 17.32% | 1.13% | 18.30% | 82.12% |
* Technology Sector Average
DSCSY
Disco
41.17
12.33
42.76%
ASX
ASE Technology Holding Co
39.54
29.78
305.25%
MCHP
Microchip
79.17
15.20
23.75%
ON
ON Semiconductor
82.66
31.57
61.79%
STM
STMicroelectronics
54.29
28.87
113.56%
GFS
GlobalFoundries Inc
54.58
21.56
65.28%
Glossary
BuyA stock rated as a "Buy" is expected to perform better than the overall market or a specific benchmark over the near-to-medium term. This rating suggests the stock is likely to deliver higher returns compared to other stocks in the same sector or market index. Note: This is not investment advice; please consult a financial advisor before making investment decisions.
HoldA stock rated as a "Hold" is expected to perform in line with the overall market or a specific benchmark. This rating indicates that the stock is neither particularly compelling nor unfavorable for investment. Note: This is not investment advice; please consult a financial advisor before making investment decisions.
SellA stock rated as a "Sell" is expected to perform worse than the overall market or a specific benchmark over the near-to-medium term. This rating suggests the stock may deliver lower returns compared to other stocks in the same sector or market index. Note: This is not investment advice; please consult a financial advisor before making investment decisions.
Disclaimer
This AI Analyst Stock Report is automatically generated by our AI systems using advanced algorithms and publicly available financial, technical, and market data. While the information provided aims to be accurate and insightful, it is intended for informational purposes only and should not be considered financial advice. Any content created by an AI (Artificial Intelligence) system may contain inaccuracies and/or contain errors. Investing in stocks carries inherent risks, and past performance is not indicative of future results. This report does not account for your personal financial circumstances, objectives, or risk tolerance. Always conduct your own research or consult with a qualified financial advisor before making investment decisions. The analysis and recommendations provided are based on historical and current data and may not fully reflect future market conditions or unexpected developments. Neither the creators of this report nor its affiliated entities guarantee the accuracy, completeness, or reliability of the information presented. Use this report at your own discretion and risk.