FRONTEO, Inc. (2158) AI Stock Analysis

• Market Cap: ¥35.66B
• Dividend Yield: N/A
• Average Volume (3M): 2.22M
• Price to Earnings (P/E): 135.8
• Beta (1Y): 1.92
• Revenue Growth: -18.95%
• EPS Growth: N/A
• Country: JP
• Employees: 225
• Sector: Technology
• Sector Strength: 88
• Industry: Information Technology Services
• EPS (TTM): 2.42
• Shares Outstanding: 39,364,860
• 10 Day Avg. Volume: 1,134,060
• 30 Day Avg. Volume: 2,218,706
• PEG Ratio: -0.34
• Price to Book (P/B): 7.05
• Price to Sales (P/S): 3.73
• P/FCF Ratio: 34.04
• 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: Hold
• Number of Analyst Covering: 0
• EPS Forecast (FY): N/A
• Revenue Forecast (FY): N/A

• Rating: 55 Neutral
• Price Target: ¥928.00 ▼(-3.33% Downside)

The overall stock score of 55 reflects a combination of mixed financial performance, neutral technical indicators, and high valuation concerns. The company's financials show potential for recovery but are currently unstable, while technical analysis suggests a lack of strong momentum. The high P/E ratio indicates overvaluation, which is a significant risk factor.

FRONTEO, Inc. Business Overview & Revenue Model

Company Description

FRONTEO, Inc. (2158) is a leading technology company based in Japan that specializes in artificial intelligence and big data analytics. The company primarily operates in the fields of legal, healthcare, and enterprise solutions, providing innovative software and services that enhance decision-making and operational efficiency. FRONTEO's core offerings include AI-driven eDiscovery tools for the legal sector, healthcare data analytics platforms, and various enterprise software solutions designed to optimize business processes.

How the Company Makes Money

FRONTEO generates revenue through multiple streams centered around its software and service offerings. The company primarily earns money by selling licenses for its proprietary software solutions, which are utilized in eDiscovery, data management, and analytics. Additionally, FRONTEO provides consulting services that help organizations integrate and leverage their technology effectively, which further contributes to its revenue. Strategic partnerships with law firms, healthcare providers, and enterprises enhance its market reach and can lead to recurring revenue through long-term contracts. The company may also explore revenue through subscription models for ongoing access to its software and support services.

FRONTEO, Inc. Financial Statement Overview

Summary

FRONTEO, Inc. exhibits a mixed financial performance. While there are signs of operational recovery and improved leverage, the company faces challenges with erratic revenue and profit margins, coupled with inconsistent cash flow. Stabilizing cash flows and enhancing profitability will be crucial for future growth and financial stability.

Income Statement

The company's income statement shows a volatile performance over recent years. The gross profit margin has been consistently positive, indicating good cost management relative to revenue. However, there is a significant fluctuation in net profit margin, with recent losses in 2023 and 2024 following profitable years. Revenue growth has also been erratic, with a decline in 2025. Despite this, recent improvements in EBIT and EBITDA margins suggest a recovery in operational efficiency.

Balance Sheet

The balance sheet reflects a moderate financial position. The debt-to-equity ratio has improved, indicating better leverage management. Return on equity is turning positive again, showing potential for increasing shareholder value. However, a relatively low equity ratio could indicate risk if financial conditions worsen. Overall, there is a positive trajectory in strengthening the balance sheet.

Cash Flow

Cash flow analysis reveals inconsistent free cash flow growth, with a notable decline in recent periods. The operating cash flow to net income ratio is positive, suggesting that the company is generating cash from its operations. However, the free cash flow to net income ratio shows variability, indicating challenges in converting profits into free cash. The company needs to stabilize its cash flow generation to ensure long-term financial health.

Breakdown	TTM	Dec 2024	Dec 2023	Dec 2022	Dec 2021	Dec 2020
Income Statement
Total Revenue	6.07B	6.10B	7.38B	7.22B	10.93B	10.37B
Gross Profit	3.37B	3.45B	3.48B	3.26B	5.57B	4.78B
EBITDA	717.38M	614.80M	-1.93B	-728.90M	2.69B	1.40B
Net Income	262.29M	555.09M	-2.84B	-1.70B	1.31B	359.10M
Balance Sheet
Total Assets	7.85B	6.47B	7.52B	9.15B	11.83B	11.94B
Cash, Cash Equivalents and Short-Term Investments	2.17B	2.60B	3.04B	1.48B	3.46B	3.00B
Total Debt	3.10B	1.99B	2.93B	3.09B	3.75B	5.63B
Total Liabilities	4.51B	3.24B	4.68B	4.10B	5.38B	7.30B
Stockholders Equity	3.34B	3.23B	2.84B	5.05B	6.44B	4.64B
Cash Flow
Free Cash Flow	0.00	668.34M	1.23B	-1.54B	1.72B	1.45B
Operating Cash Flow	0.00	751.47M	1.71B	-914.62M	2.38B	2.03B
Investing Cash Flow	0.00	-254.03M	-181.86M	-625.06M	-618.21M	-347.73M
Financing Cash Flow	0.00	-911.48M	-32.15M	-606.32M	-1.46B	-53.02M

FRONTEO, Inc. Technical Analysis

• Technical Analysis Sentiment: Neutral
• Last Price: 960.00
• 50DMA: Negative
• 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:2158, the sentiment is Neutral. The current price of 960 is above the 20-day moving average (MA) of 928.15, above the 50-day MA of 937.54, and above the 200-day MA of 721.88, indicating a neutral trend. The MACD of -1.28 indicates Negative momentum. The RSI at 48.51 is Neutral, neither overbought nor oversold. The STOCH value of 65.04 is Neutral, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Neutral sentiment for JP:2158.

FRONTEO, Inc. Peers Comparison

Name	Overall Rating	Market Cap	P/E Ratio	ROE	Dividend Yield	Revenue Growth	EPS Growth
4396	76 Outperform	¥31.14B	21.21	―	1.60%	22.25%	31.88%
3788	76 Outperform	¥24.73B	32.44	―	1.53%	7.83%	49.73%
3393	74 Outperform	¥27.15B	13.90	―	4.58%	12.32%	10.42%
2359	74 Outperform	¥29.28B	12.17	―	2.79%	2.11%	5.55%
2349	72 Outperform	¥25.99B	11.02	―	1.23%	7.21%	0.30%
Sector *	61 Neutral	$37.18B	12.37	-10.20%	1.83%	8.50%	-7.62%
2158	55 Neutral	¥35.66B	135.78	―	―	-18.95%	―