Nippon Densetsu Kogyo Co., Ltd. (1950) AI Stock Analysis

• Market Cap: ¥325.80B
• Dividend Yield: 2.79%
• Average Volume (3M): 98.11K
• Price to Earnings (P/E): 17.1
• Beta (1Y): 1.00
• Revenue Growth: 10.62%
• EPS Growth: 64.25%
• Country: JP
• Employees: 4,744
• Sector: Industrials
• Sector Strength: 72
• Industry: Industrial - Infrastructure Operations
• EPS (TTM): N/A
• Shares Outstanding: 61,537,220
• 10 Day Avg. Volume: 86,150
• 30 Day Avg. Volume: 98,106
• PEG Ratio: 0.26
• Price to Book (P/B): 0.63
• Price to Sales (P/S): 0.57
• P/FCF Ratio: -13.58
• 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: ¥5,400.00
• Price Target Upside: 63.14% Upside
• Rating Consensus: Moderate Buy
• Number of Analyst Covering: 1
• EPS Forecast (FY): N/A
• Revenue Forecast (FY): N/A

• Rating: 70 Outperform
• Price Target: ¥5,830.00 ▲(76.13% Upside)
• Action: Reiterated Date: 02/28/26
• Date: Action: Reiterated 02/28/26

The score is primarily driven by solid profitability and a very strong, low-leverage balance sheet, but is held back by negative free cash flow and weak earnings-to-cash conversion. Technically, the trend is strong yet appears overextended (very high RSI/Stoch), while valuation is reasonable with a modest dividend yield.

Positive Factors

Low leverage / strong balance sheet

Very low debt and a 66% equity ratio provide durable financial flexibility for an infrastructure operator. This reduces refinancing risk, supports bidding on large projects, and preserves capacity for strategic capex or M&A without materially increasing financial risk over the medium term.

Solid profit margins

Consistent gross and operating margins indicate effective cost control and pricing in an infrastructure business. Sustainable margins support reinvestment in maintenance and growth, provide a buffer in cyclical periods, and underpin long-term cash generation potential if conversion improves.

Consistent revenue growth

Double-digit revenue growth signals durable demand for services in infrastructure operations and successful commercial execution. Sustained top-line expansion supports scale benefits, pricing leverage, and the capacity to fund margin-enhancing investments over the next several quarters.

Negative Factors

Negative free cash flow

Material negative free cash flow constrains the company's ability to self-fund capex, working capital and dividends despite low leverage. Over several quarters this can force external financing or cutbacks in investment, reducing strategic optionality and increasing execution risk.

Poor earnings-to-cash conversion

A negative OCF-to-net-income ratio indicates reported earnings are not converting into cash, pointing to working capital or receivables issues. Persistent poor conversion undermines quality of earnings and increases reliance on balance sheet buffers, raising medium-term liquidity risk.

Moderate ROE & slight profitability erosion

A middling ROE and indications of sliding profitability suggest limited returns on equity and margin pressure. Over time this can constrain internal capital generation and weaken competitiveness unless margins and ROE are restored through efficiency or higher-value contracts.

Nippon Densetsu Kogyo Co., Ltd. Business Overview & Revenue Model

Company Description

Nippon Densetsu Kogyo Co., Ltd. operates as a railway electronics equipment construction company in Japan. The company engages in the construction of electrical facilities for buildings, such as related to renewable energies and energy-saving buildings, as well as undertakes renovation, and air conditioning and plumbing equipment works; and information and communication systems, including mobile communication-related construction, IP network related equipment construction, railway communication systems construction, and network infrastructure development, as well as maintenance and technical support services. It also constructs power plants and substations, electric train lines, transmission lines, electric light and power systems, signal equipment, and public and private railways, as well as provides human resources development services. The company was formerly known as Railway Electric Industries Co., Ltd. and changed its name to Nippon Densetsu Kogyo Co., Ltd. in 1949. Nippon Densetsu Kogyo Co., Ltd. was founded in 1942 and is based in Tokyo, Japan.

How the Company Makes Money

Nippon Densetsu Kogyo Co., Ltd. generates revenue through the sale of its electrical components and systems to various industries, including manufacturing, construction, and telecommunications. The company's revenue model is primarily based on direct sales to businesses and contractors, as well as partnerships with distributors and retailers that extend its market reach. Key revenue streams include the sale of hardware products, maintenance and support services, and customized solutions for specific industrial applications. Additionally, the company benefits from long-term contracts with major clients, ensuring a steady flow of income, while ongoing investments in research and development allow it to innovate and introduce new products that align with market trends and customer demands.

Nippon Densetsu Kogyo Co., Ltd. Financial Statement Overview

Summary

Strong income statement and balance sheet strength (good margins, 11.81% revenue growth, very low leverage with 0.02 debt-to-equity and 66.02% equity ratio) are offset by weak cash generation (negative free cash flow and poor cash conversion), which lowers the overall financial quality.

Income Statement

Nippon Densetsu Kogyo Co., Ltd. exhibits a strong gross profit margin of 15.82% and a healthy net profit margin of 6.08% in the latest fiscal year. The revenue growth rate was 11.81% over the past year, indicating a positive growth trajectory. EBIT and EBITDA margins are solid at 8.27% and 11.38% respectively, demonstrating effective cost management and operational efficiency, although profitability has slightly decreased compared to prior periods.

Balance Sheet

The company's balance sheet is robust with a low debt-to-equity ratio of 0.02, highlighting minimal leverage risk. The return on equity (ROE) stands at 6.74%, reflecting moderate profitability on shareholders' investment. The equity ratio is 66.02%, indicating a strong equity base relative to total assets, emphasizing financial stability and low financial risk.

Cash Flow

Despite a negative free cash flow of -9.12 billion JPY indicating operational challenges, the operating cash flow to net income ratio is -0.33, suggesting issues in converting earnings to cash flow. The free cash flow to net income ratio is also negative, underlining cash flow constraints. This reflects potential liquidity challenges that need addressing for sustained growth.

Breakdown	TTM	Mar 2025	Mar 2024	Mar 2023	Mar 2022	Mar 2021
Income Statement
Total Revenue	214.15B	216.92B	194.03B	172.10B	173.57B	195.69B
Gross Profit	34.33B	34.31B	28.51B	23.92B	21.66B	28.86B
EBITDA	26.38B	24.69B	19.22B	14.64B	12.08B	18.03B
Net Income	13.83B	13.19B	10.04B	7.17B	5.22B	9.55B
Balance Sheet
Total Assets	258.08B	296.39B	282.60B	261.37B	257.70B	265.66B
Cash, Cash Equivalents and Short-Term Investments	32.47B	27.17B	36.21B	42.34B	45.29B	42.76B
Total Debt	5.35B	4.10B	100.00M	100.00M	100.00M	100.00M
Total Liabilities	52.44B	86.73B	83.48B	71.14B	72.51B	81.30B
Stockholders Equity	191.99B	195.72B	185.79B	177.23B	172.37B	171.54B
Cash Flow
Free Cash Flow	0.00	-9.12B	1.58B	-2.55B	4.54B	12.57B
Operating Cash Flow	0.00	-4.34B	7.38B	13.23B	9.51B	19.57B
Investing Cash Flow	0.00	-5.77B	-4.18B	-12.44B	-6.64B	-9.40B
Financing Cash Flow	0.00	169.00M	-7.93B	-2.34B	-2.74B	-2.74B

Nippon Densetsu Kogyo Co., Ltd. Technical Analysis

• Technical Analysis Sentiment: Positive
• Last Price: 3310.00
• 50DMA: Positive
• 100DMA: Positive
• 200DMA: Positive
• MACD: Negative
• RSI: Negative
• STOCH: Negative

Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For JP:1950, the sentiment is Positive. The current price of 3310 is below the 20-day moving average (MA) of 4591.00, below the 50-day MA of 3904.60, and above the 200-day MA of 3046.35, indicating a bullish trend. The MACD of 372.09 indicates Negative momentum. The RSI at 85.01 is Negative, neither overbought nor oversold. The STOCH value of 83.62 is Negative, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Positive sentiment for JP:1950.

Nippon Densetsu Kogyo Co., Ltd. Peers Comparison

Name	Overall Rating	Market Cap	P/E Ratio	ROE	Dividend Yield	Revenue Growth	EPS Growth
1952	80 Outperform	¥199.20B	14.82	―	2.81%	8.83%	49.49%
1941	76 Outperform	¥282.69B	16.21	9.20%	2.78%	1.31%	59.20%
1949	74 Outperform	¥345.45B	19.95	12.41%	1.68%	8.09%	20.78%
1950	70 Outperform	¥325.80B	17.06	―	2.79%	10.62%	64.25%
1968	70 Outperform	¥200.18B	18.15	―	2.72%	-2.11%	-11.31%
1934	68 Neutral	¥221.53B	16.91	―	2.87%	6.66%	46.38%
Sector *	63 Neutral	$10.79B	15.43	7.44%	2.01%	2.89%	-14.66%

Nippon Densetsu Kogyo Co., Ltd. Corporate Events

Nippon Densetsu Kogyo Lifts Profit Outlook and Hikes Dividend on Strong Infrastructure Demand

Nippon Densetsu Kogyo has sharply revised upward its earnings forecasts for the fiscal year ending March 31, 2026, projecting significantly higher operating and ordinary profit and profit attributable to owners of parent despite slightly lower net sales. The company cites a favorable business environment driven by robust private-sector demand for large redevelopment and data center projects and increased capital spending by railway operators, alongside improved profitability from a stronger focus on high-margin contracts and better pass-through of rising material and labor costs, even as some construction work is delayed. Reflecting these stronger earnings prospects and its policy of targeting a 40% dividend payout ratio, the company has also raised its year-end dividend forecast to ¥115 per share, up ¥23 from the previous plan and well above the prior year’s ¥90, signaling enhanced returns to shareholders.

The most recent analyst rating on (JP:1950) stock is a Hold with a Yen3947.00 price target. To see the full list of analyst forecasts on Nippon Densetsu Kogyo Co., Ltd. stock, see the JP:1950 Stock Forecast page.

Nippon Densetsu Kogyo Posts Profit Surge and Lifts Full-Year Forecast, Dividend Outlook

Nippon Densetsu Kogyo reported strong consolidated results for the nine months to 31 December 2025, with net sales rising 8.2% year on year to ¥135.3 billion and operating profit soaring 166% to ¥9.86 billion. Ordinary profit climbed 128% to ¥11.28 billion and profit attributable to owners of the parent jumped 174% to ¥7.93 billion, driving basic earnings per share up to ¥135.74. The company’s financial position also strengthened, with total assets increasing to ¥300.8 billion and equity-to-asset ratio improving to 68.1%, while comprehensive income surged more than fivefold, underscoring robust profitability. Reflecting this performance and its confidence in future earnings, management revised both the full-year forecast and dividend outlook, now projecting fiscal 2026 full-year net sales of ¥228.37 billion and a 24%-plus rise in operating and ordinary profit, alongside a higher annual dividend forecast of ¥115 per share, signaling enhanced shareholder returns on the back of improved earnings momentum and balance sheet resilience.

The most recent analyst rating on (JP:1950) stock is a Hold with a Yen3947.00 price target. To see the full list of analyst forecasts on Nippon Densetsu Kogyo Co., Ltd. stock, see the JP:1950 Stock Forecast page.