SMS Co., Ltd. (2175) AI Stock Analysis

• Market Cap: ¥151.31B
• Dividend Yield: 2.09%
• Average Volume (3M): 367.91K
• Price to Earnings (P/E): ―
• Beta (1Y): 0.71
• Revenue Growth: 7.27%
• EPS Growth: 13.10%
• Country: JP
• Employees: 4,188
• Sector: Healthcare
• Sector Strength: 45
• Industry: Medical - Healthcare Information Services
• EPS (TTM): -3.84
• Shares Outstanding: 87,561,600
• 10 Day Avg. Volume: 290,600
• 30 Day Avg. Volume: 367,910
• PEG Ratio: -1.10
• Price to Book (P/B): 2.03
• Price to Sales (P/S): 1.58
• P/FCF Ratio: 17.85
• 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): 81.25
• Revenue Forecast (FY): ¥64.69B

• Rating: 76 Outperform
• Price Target: ¥1,826.00 ▲(20.05% Upside)
• Action: Upgraded Date: 01/23/26
• Date: Action: Upgraded 01/23/26

The score is primarily supported by strong financial performance (healthy growth, high margins, and low leverage). Technicals are constructive but tempered by an overbought RSI indicating elevated pullback risk. Valuation is reasonable with a moderate P/E and a modest dividend yield.

Positive Factors

Margin Sustainability

Very high gross margin (82.09%) and solid net margin (9.93%) indicate durable pricing power and operational efficiency in messaging services. Sustained margins provide capacity to fund R&D and platform investment, supporting long-term competitiveness and cash returns.

Revenue Growth Trends

Consistent revenue growth (+12.93% YoY) reflects rising demand for transaction and subscription messaging. A recurring transaction-fee and subscription model with enterprise customers creates predictable revenue streams that support multi-year visibility and strategic investment planning.

Balance Sheet Strength

Low leverage (debt-to-equity 0.17) and a strong equity ratio (61.83%) give the company financial flexibility to fund capex, pursue M&A, or absorb shocks without aggressive refinancing. A ROE of ~12.79% indicates reasonably efficient capital use.

Negative Factors

Free Cash Flow Decline

Free cash flow declined from 2024 to 2025 despite strong operating cash conversion (operating cash flow to net income ~0.96). If higher capex or working-capital needs persist, reduced FCF can limit reinvestment, dividend capacity, and balance sheet optionality over the medium term.

Operating Margin Pressure

A slight decline in EBIT margin, despite high gross margins, suggests rising operating costs or increased investment that compresses operating profitability. If this trend persists, it could erode the conversion of gross margin strength into sustainable net returns and cash generation.

Business Concentration Risk

Heavy reliance on SMS/MMS transaction fees and operator partnerships concentrates revenue exposure. Structural risks include technological substitution, pricing pressure, or contract shifts; without meaningful diversification, revenue durability could be challenged over the medium term.

SMS Co., Ltd. Business Overview & Revenue Model

Company Description

SMS Co., Ltd. provides information infrastructure for the nursing care, medical care, career, healthcare, and elderly care field business areas in Japan and internationally. It operates an online community site for professionals or families engaged in nursing care; a certification course information portal; and a housing information portal for seniors, as well as a home-delivered meal search site. The company also operates various sites that provide online community, mail order, and magazines/book services for nurses; services for pharmacists and pharmacies; hospital management and administrator services; and consulting services for national and local governments. In addition, it provides recruiting agent services, as well as recruiting ads services for professionals and operators in nursing and medical care fields. Further, the company offers medical-related services. SMS Co., Ltd. was incorporated in 2003 and is based in Tokyo, Japan.

How the Company Makes Money

SMS Co., Ltd. generates revenue primarily through the provision of mobile messaging services to businesses and consumers. The company's key revenue streams include transaction fees from SMS and MMS messages sent and received, subscription fees for value-added services such as bulk messaging and automated messaging systems, and partnerships with mobile network operators that facilitate the delivery of their messaging services. Additionally, SMS Co., Ltd. may earn income from advertising and promotional campaigns that leverage their messaging platform, as well as from strategic collaborations with other tech companies that enhance their service offerings.

SMS Co., Ltd. Financial Statement Overview

Summary

Strong overall fundamentals driven by consistent revenue growth (+12.93% from 2024 to 2025) and high gross margin (82.09%) with a solid net margin (9.93%). Balance sheet leverage is conservative (debt-to-equity 0.17; equity ratio 61.83%). Partly offset by a slight EBIT margin decline and lower free cash flow in 2025 versus 2024.

Income Statement

SMS Co., Ltd. has demonstrated strong and consistent revenue growth over the years, with a notable increase of 12.93% from 2024 to 2025. The company maintains robust profitability with a high gross profit margin of 82.09% and a net profit margin of 9.93% for 2025. However, there was a slight decline in EBIT margin, indicating potential cost management challenges.

Balance Sheet

The company exhibits a healthy balance sheet with a strong equity ratio of 61.83% in 2025, indicating financial stability. The debt-to-equity ratio is low at 0.17, reflecting prudent financial leverage. Return on equity is solid at 12.79%, though slightly decreased from the previous year, suggesting some room for improvement in generating shareholder returns.

Cash Flow

SMS Co., Ltd. shows positive cash flow trends with a substantial operating cash flow to net income ratio of 0.96, indicating efficient cash generation from operations. However, there was a decline in free cash flow from 2024 to 2025, suggesting increased capital expenditures or cash management issues.

Breakdown	TTM	Mar 2025	Mar 2024	Mar 2024	Mar 2023	Mar 2022
Income Statement
Total Revenue	62.20B	60.95B	53.97B	45.67B	38.90B	35.96B
Gross Profit	51.00B	50.04B	44.09B	37.20B	31.96B	29.82B
EBITDA	10.91B	10.15B	11.73B	10.18B	8.80B	7.66B
Net Income	6.83B	6.05B	7.23B	6.41B	5.41B	4.80B
Balance Sheet
Total Assets	72.33B	76.54B	72.48B	65.11B	56.60B	49.44B
Cash, Cash Equivalents and Short-Term Investments	13.01B	16.18B	18.24B	16.96B	14.64B	10.54B
Total Debt	7.90B	8.05B	6.43B	8.33B	10.37B	13.52B
Total Liabilities	28.43B	29.22B	28.20B	26.69B	26.60B	26.78B
Stockholders Equity	43.90B	47.32B	44.28B	38.42B	29.99B	22.66B
Cash Flow
Free Cash Flow	3.09B	5.38B	9.33B	8.22B	9.61B	6.39B
Operating Cash Flow	3.19B	5.81B	9.77B	8.50B	9.82B	6.77B
Investing Cash Flow	-942.50M	-4.07B	-3.74B	-3.76B	-2.08B	-1.78B
Financing Cash Flow	-3.31B	-4.15B	-5.02B	-3.04B	-3.99B	-5.22B

SMS Co., Ltd. Technical Analysis

• Technical Analysis Sentiment: Positive
• Last Price: 1521.00
• 50DMA: Positive
• 100DMA: Positive
• 200DMA: Positive
• MACD: Positive
• RSI: Neutral
• STOCH: Neutral

Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For JP:2175, the sentiment is Positive. The current price of 1521 is below the 20-day moving average (MA) of 1702.60, below the 50-day MA of 1655.42, and above the 200-day MA of 1513.75, indicating a bullish trend. The MACD of 8.79 indicates Positive momentum. The RSI at 55.50 is Neutral, neither overbought nor oversold. The STOCH value of 72.60 is Neutral, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Positive sentiment for JP:2175.

SMS Co., Ltd. Peers Comparison

Name	Overall Rating	Market Cap	P/E Ratio	ROE	Dividend Yield	Revenue Growth	EPS Growth
2175	76 Outperform	¥151.31B	-83.44	―	2.09%	7.27%	13.10%
2413	70 Outperform	¥1.09T	18.91	12.15%	1.01%	33.50%	17.26%
3902	63 Neutral	¥65.59B	228.03	―	0.39%	6.17%	-8918.66%
4483	63 Neutral	¥214.31B	26.76	―	0.43%	20.55%	48.62%
Sector *	51 Neutral	$7.86B	-0.30	-43.30%	2.27%	22.53%	-2.21%
4480	51 Neutral	¥57.19B	77.03	5.76%	―	31.95%	-40.95%
4438	50 Neutral	¥2.91B	-4.28	―	―	16.19%	-4.42%