NIPPON RIETEC CO., LTD. (1938) AI Stock Analysis

• Market Cap: ¥76.08B
• Dividend Yield: 2.61%
• Average Volume (3M): 38.85K
• Price to Earnings (P/E): 13.3
• Beta (1Y): 0.83
• Revenue Growth: 10.18%
• EPS Growth: 38.26%
• Country: JP
• Employees: 1,551
• Sector: Industrials
• Sector Strength: 72
• Industry: Hardware, Equipment & Parts
• EPS (TTM): 60.38
• Shares Outstanding: 25,617,716
• 10 Day Avg. Volume: 41,980
• 30 Day Avg. Volume: 38,853
• PEG Ratio: 0.11
• Price to Book (P/B): 0.58
• Price to Sales (P/S): 0.54
• P/FCF Ratio: 119.09
• Enterprise Value/Market Cap: N/A
• Enterprise Value/Revenue: N/A
• Enterprise Value/Gross Profit: N/A
• Enterprise Value/Ebitda: N/A
• 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: 74 Outperform
• Price Target: ¥3,534.00 ▲(55.34% Upside)
• Action: Reiterated Date: 02/15/26
• Date: Action: Reiterated 02/15/26

The score is driven primarily by strong financial performance (growth, solid margins, and very low leverage). Technicals are positive but tempered by overbought signals (high RSI and Stoch), while reasonable valuation (P/E ~12 and ~2.19% yield) provides additional support.

Positive Factors

Revenue Growth

Nippon Rietec’s ~17% revenue expansion year-over-year reflects durable demand for contracted engineering and construction services, particularly in rail and telecom infrastructure. Sustained top-line growth suggests consistent project wins and scaling of recurring maintenance work, supporting longer-term reinvestment capacity and a broader contract footprint that can underpin multi-quarter organic growth.

Profitability and Margins

Healthy 2025 margins (net 6.9%, EBITDA 11.7%) indicate durable operational efficiency in fixed- and unit-price contracting. Sustained margin levels provide a cushion against project cost volatility, allow reinvestment in tools and workforce, and support stable operating cash flows across infrastructure cycles—helpful for project bidding competitiveness and long-term margin sustainability.

Balance Sheet Strength

Extremely low leverage and a high equity ratio give Nippon Rietec strong financial flexibility to pursue large multi-site projects and absorb execution delays without refinancing stress. This conservative capital structure lowers solvency risk, supports counter-cyclical investments or working-capital needs, and underpins resilience across medium-term infrastructure spending cycles.

Negative Factors

Cash Conversion Efficiency

Operating cash flow of only ~0.43x net income and relatively low FCF-to-net income point to cash conversion challenges despite FCF growth. In project-based construction, weak cash conversion can create timing squeezes on payables and receivables, constrain the ability to fund new contract mobilization from internal cash, and increase dependence on external financing for working capital even with low headline leverage.

Modest Return on Equity / Asset Utilization

A 7.4% ROE and explicit note that asset utilization could improve suggest the company is not fully extracting returns from capital deployed. Persistently modest ROE limits internal funding for growth and divestment flexibility, and indicates potential inefficiencies in equipment, workforce deployment, or project mix that can cap long-term shareholder value creation.

Exposure to Infrastructure Investment Cycles

Revenue and earnings depend materially on public and private infrastructure spending and winning large multi-site contracts. This structural exposure creates demand cyclicality and backlog visibility risk; prolonged slowdowns or intensified competition for awarded projects can reduce revenue predictability and pressure margins over several quarters.

NIPPON RIETEC CO., LTD. Business Overview & Revenue Model

Company Description

Nippon Rietec Co.,Ltd. engages in the railway electrical equipment construction business in Japan. The company's railway electrical equipment includes signal, power generation and transformation, optical communication cable, and transmission line equipment, as well as information and communication systems and new transportation systems. It also provides road construction equipment, including traffic signals, road information control systems, road signs, and landscape signs. In addition, the company offers indoor/outdoor electric facility, optical communication cable equipment, and solar power generation systems; and transmission lines for equipment sector. Nippon Rietec Co.,Ltd. was incorporated in 1945 and is headquartered in Tokyo, Japan.

How the Company Makes Money

NIPPON RIETEC generates revenue through multiple streams, primarily by selling its industrial machinery and equipment to various sectors, including automotive, electronics, and healthcare. The company earns money through direct sales of its products, as well as through long-term contracts for maintenance and support services. Additionally, NIPPON RIETEC may engage in partnerships with other manufacturers and technology firms to co-develop new solutions, which can lead to shared revenue opportunities. The company's focus on innovation and high-quality products allows it to maintain competitive pricing and secure contracts with large corporations, contributing significantly to its earnings.

NIPPON RIETEC CO., LTD. Financial Statement Overview

Summary

Strong overall fundamentals driven by solid revenue growth (~17% from 2024 to 2025) and healthy profitability (2025 net margin 6.9%, EBITDA margin 11.7%). Balance sheet is very stable with low leverage (debt-to-equity 0.03, equity ratio 67.4%). Cash flow is improving (FCF up 72% YoY) but cash generation efficiency remains a constraint (operating cash flow to net income 0.43 and relatively low FCF-to-net income).

Income Statement

The company demonstrates strong financial performance with consistent revenue growth. The revenue has increased by approximately 17% from 2024 to 2025, indicating solid growth. Gross profit margin and net profit margin are strong at 15.8% and 6.9% respectively for 2025, showcasing efficient cost management and profitability. EBIT and EBITDA margins of 7.6% and 11.7% respectively indicate robust operational performance.

Balance Sheet

The balance sheet is stable with a low debt-to-equity ratio of 0.03, reflecting low leverage and financial risk. The equity ratio is high at 67.4%, suggesting a strong capital structure. Return on equity is reasonable at 7.4%, indicating effective use of equity. Overall, the financial position is solid, but the company could benefit from improved asset utilization.

Cash Flow

The cash flow position shows some stability but with room for improvement. Operating cash flow to net income ratio is 0.43, indicating good cash conversion. Free cash flow has grown by 72% from 2024 to 2025, showing enhanced cash management. However, the free cash flow to net income ratio is relatively low, suggesting potential inefficiencies in cash generation.

Breakdown	TTM	Mar 2025	Mar 2024	Mar 2023	Mar 2022	Mar 2021
Income Statement
Total Revenue	69.59B	68.67B	58.54B	53.75B	53.23B	55.20B
Gross Profit	11.14B	10.84B	8.79B	7.70B	7.71B	8.84B
EBITDA	7.68B	8.05B	5.39B	4.51B	4.85B	5.83B
Net Income	4.94B	4.73B	2.77B	2.14B	2.40B	3.28B
Balance Sheet
Total Assets	89.74B	94.63B	87.32B	82.85B	79.86B	80.62B
Cash, Cash Equivalents and Short-Term Investments	7.77B	8.31B	8.91B	7.85B	7.84B	6.76B
Total Debt	3.55B	1.76B	2.13B	1.79B	1.49B	1.32B
Total Liabilities	27.64B	30.90B	27.54B	26.07B	24.35B	25.98B
Stockholders Equity	62.10B	63.73B	59.78B	56.78B	55.50B	54.64B
Cash Flow
Free Cash Flow	0.00	309.04M	1.80B	1.25B	1.76B	1.50B
Operating Cash Flow	0.00	2.04B	3.86B	2.17B	2.63B	3.07B
Investing Cash Flow	0.00	-1.19B	-1.85B	-830.85M	-455.04M	-1.52B
Financing Cash Flow	0.00	-1.44B	-960.44M	-1.33B	-1.09B	-2.02B

NIPPON RIETEC CO., LTD. Technical Analysis

• Technical Analysis Sentiment: Positive
• Last Price: 2275.00
• 50DMA: Positive
• 100DMA: Positive
• 200DMA: Positive
• MACD: Negative
• RSI: Neutral
• STOCH: Neutral

Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For JP:1938, the sentiment is Positive. The current price of 2275 is below the 20-day moving average (MA) of 2853.55, below the 50-day MA of 2526.02, and above the 200-day MA of 2098.07, indicating a bullish trend. The MACD of 199.12 indicates Negative momentum. The RSI at 66.23 is Neutral, neither overbought nor oversold. The STOCH value of 67.23 is Neutral, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Positive sentiment for JP:1938.

NIPPON RIETEC CO., LTD. Peers Comparison

Name	Overall Rating	Market Cap	P/E Ratio	ROE	Dividend Yield	Revenue Growth	EPS Growth
6806	78 Outperform	¥729.41B	24.68	8.09%	2.85%	11.18%	-0.75%
1938	74 Outperform	¥76.08B	13.27	―	2.61%	10.18%	38.26%
6768	69 Neutral	¥59.63B	36.24	3.63%	2.25%	11.74%	-30.96%
6762	67 Neutral	¥3.97T	21.20	―	1.41%	7.73%	-1.93%
6807	64 Neutral	$173.32B	22.82	5.91%	2.39%	-3.24%	-25.21%
Sector *	63 Neutral	$10.79B	15.43	7.44%	2.01%	2.89%	-14.66%
7915	56 Neutral	¥61.66B	62.19	-0.07%	4.00%	0.12%	-105.94%

NIPPON RIETEC CO., LTD. Corporate Events

Nippon Rietec Sets Pricing for Multi-Billion Yen Secondary Share Offering

Nippon Rietec has set the terms for a secondary offering of its common stock, following a February 20, 2026 board resolution, establishing a selling price of 2,934 yen per share for shares to be purchased and underwritten by securities firms. Underwriters will acquire the shares at 2,782.75 yen per share, with the total selling amount reaching approximately 4.39 billion yen and delivery scheduled for March 10, 2026.

In addition, the company approved a secondary offering by way of over-allotment of 224,200 shares at the same selling price of 2,934 yen per share, for a further total selling amount of about 657.8 million yen, also settling on March 10, 2026. The transactions are expected to enhance the liquidity of Nippon Rietec’s shares and potentially broaden its investor base, although they do not involve a new issuance of stock and therefore do not directly raise fresh capital for the company.

The most recent analyst rating on (JP:1938) stock is a Hold with a Yen3504.00 price target. To see the full list of analyst forecasts on NIPPON RIETEC CO., LTD. stock, see the JP:1938 Stock Forecast page.

NIPPON RIETEC to Cancel 500,000 Treasury Shares, Tightening Share Float

NIPPON RIETEC announced that its Board of Directors has resolved to cancel 500,000 shares of its common stock, representing 1.95% of the total issued shares, under Article 178 of the Companies Act. Following the cancellation, scheduled for March 16, 2026, the total number of issued shares will decrease to 25,117,717, with treasury shares reduced to 337,168, a move that effectively tightens the share float and may enhance capital efficiency for existing shareholders.

The cancellation of treasury shares signals a shareholder-friendly capital policy, as it reduces potential dilution and can support per-share metrics over time. By shrinking its share count while maintaining operational continuity, NIPPON RIETEC reinforces its financial discipline and may strengthen its market positioning, potentially improving the attractiveness of its stock within the Japanese infrastructure and construction sector.

The most recent analyst rating on (JP:1938) stock is a Hold with a Yen2982.00 price target. To see the full list of analyst forecasts on NIPPON RIETEC CO., LTD. stock, see the JP:1938 Stock Forecast page.

Nippon Rietec Announces Secondary Share Offering by Major Shareholders

Nippon Rietec’s board has approved a secondary offering of 1,494,800 existing common shares to be sold by several major shareholders, including MUFG Bank, Mizuho Bank, Sumitomo Mitsui Trust Bank, Sumitomo Electric Industries and Kyosan Electric Manufacturing. The shares will be underwritten and priced in early March based on the Tokyo Stock Exchange closing price with a 0.90–1.00 multiplier, with the final terms delegated to President Kimito Kubo.

In addition, up to 224,200 shares may be offered through an over-allotment option, to be supplied by a designated underwriter borrowing shares from an existing shareholder. The over-allotment size or execution may change depending on demand, indicating an effort to support market liquidity and price stability without issuing new shares or raising fresh capital for the company itself.

The most recent analyst rating on (JP:1938) stock is a Hold with a Yen2982.00 price target. To see the full list of analyst forecasts on NIPPON RIETEC CO., LTD. stock, see the JP:1938 Stock Forecast page.

Nippon Rietec Lifts Full-Year Profit Outlook on Strong Project Backlog

Nippon Rietec Co., Ltd. is a Japan-based construction and engineering company listed on the Tokyo Stock Exchange Prime Market, focusing on infrastructure-related projects and leveraging a substantial backlog to support recurring revenues. Its operations are highly exposed to construction input costs but benefit from disciplined order acceptance, pricing power with clients, and careful project execution to sustain profitability.

The company has raised its full-year earnings forecast for the fiscal year ending March 31, 2026, on the back of stronger-than-expected progress and completion of carried-over construction projects that are lifting net sales. Despite rising material and labor expenses, Nippon Rietec now expects double-digit percentage increases in operating and ordinary profit versus its earlier guidance, has upgraded non-consolidated profit projections for the year, and plans to determine the year-end dividend in line with its shareholder return policy targeting a DOE of 3.2%.

The most recent analyst rating on (JP:1938) stock is a Buy with a Yen2987.00 price target. To see the full list of analyst forecasts on NIPPON RIETEC CO., LTD. stock, see the JP:1938 Stock Forecast page.

NIPPON RIETEC Posts Strong Nine-Month Earnings and Raises Full-Year Forecast

NIPPON RIETEC reported strong consolidated results for the nine months ended December 31, 2025, with net sales rising 10.5% year on year to ¥48.49 billion and operating profit surging 84.2% to ¥3.37 billion. Ordinary profit climbed 66.5% to ¥3.88 billion and profit attributable to owners of parent increased 55.9% to ¥2.55 billion, lifting basic earnings per share to ¥102.80.

Total assets expanded to ¥104.32 billion while equity rose to ¥65.46 billion, though the equity-to-asset ratio dipped to 62.7% from 67.3%. The company maintained its dividend policy, projecting a full-year dividend of ¥82 per share for the fiscal year ending March 31, 2026, and upgraded its full-year forecast to ¥73.6 billion in net sales and ¥4.9 billion in profit attributable to owners, signaling continued earnings growth for shareholders.

The most recent analyst rating on (JP:1938) stock is a Buy with a Yen2987.00 price target. To see the full list of analyst forecasts on NIPPON RIETEC CO., LTD. stock, see the JP:1938 Stock Forecast page.