Soliton Systems KK (3040) AI Stock Analysis

• Market Cap: ¥36.13B
• Dividend Yield: 3.09%
• Average Volume (3M): 114.60K
• Price to Earnings (P/E): 15.0
• Beta (1Y): 0.82
• Revenue Growth: 3.44%
• EPS Growth: 79.35%
• Country: JP
• Employees: 678
• Sector: Technology
• Sector Strength: 88
• Industry: Software - Infrastructure
• EPS (TTM): 45.23
• Shares Outstanding: 19,738,888
• 10 Day Avg. Volume: 100,740
• 30 Day Avg. Volume: 114,603
• PEG Ratio: -1.13
• Price to Book (P/B): 1.73
• Price to Sales (P/S): 1.14
• P/FCF Ratio: 11.53
• 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): 18,184.65
• Revenue Forecast (FY): ¥3.34T

• Rating: 78 Outperform
• Price Target: ¥2,226.00 ▲(8.80% Upside)

Soliton Systems KK's stock is supported by strong financial performance and positive technical indicators. The company's robust balance sheet and consistent cash flow generation are significant strengths. While the valuation is fair, the attractive dividend yield adds to the stock's appeal. The absence of earnings call data and corporate events does not impact the overall positive outlook.

Positive Factors

Balance sheet strength

Low leverage and a strong equity ratio reduce refinancing and solvency risk, giving the company durable financial flexibility. This supports sustained investment in products, contract fulfillment for enterprise/public-sector clients, and resilience through economic cycles.

Positive free cash flow

Sustained positive free cash flow provides a reliable internal funding source for R&D, maintenance of secure-comm and IT-security offerings, and shareholder distributions. It underpins long-term operations without dependence on external financing.

Robust gross and net margins

Consistently strong gross and net margins signal pricing power and effective cost controls in software/infrastructure services. That margin durability supports reinvestment in product development and sustaining competitive service levels over multiple quarters.

Negative Factors

Eroding operating margins

Falling EBIT and EBITDA margins point to weakening operating efficiency or rising costs, which can reduce the firm's ability to convert revenue into operating profit. If persistent, this will limit reinvestment capacity and pressure long-term profitability.

Weakening cash flow trends

A drop in operating cash flow and slowing free cash flow growth reduces financial headroom for capex, product development, or defensive actions. Over several quarters this could force trade-offs between growth investment and shareholder returns.

Modest revenue growth; recent dip

Only modest topline growth and a recent revenue dip suggest limited market expansion or intensifying competition. Persistently low growth constrains scale economies and increases reliance on margin improvements to drive earnings growth over the medium term.

Soliton Systems KK Business Overview & Revenue Model

Company Description

Soliton Systems K.K., a technology company, provides IT security, remote live broadcasting, and embedded solutions in Japan and internationally. The company offers IT security products that include mailzen, soliton secure desktop, NetAttest D3, NetAttest LAP, and cyber space analytics.. It also provides mobile video transmission products comprising smart-telecaster ZAO, smart-telecaster Zao-S, smart-telecaster Zao-SH, ZAO App, HD view decoder/receiver, cloud view, cloud view switcher, and VMS Plus. In addition, the company offers advanced teleoperation products and data analytics. Soliton Systems K.K. was founded in 1979 and is headquartered in Tokyo, Japan.

How the Company Makes Money

Soliton Systems generates revenue through multiple streams, primarily through the sale of its video transmission equipment and cybersecurity software licenses. The company offers subscription-based services for its cloud platforms, providing recurring revenue. Additionally, Soliton partners with various distributors and technology firms to expand its market reach, which allows for increased sales and service contracts. The company also benefits from maintenance and support services that accompany its products, contributing to its overall earnings.

Soliton Systems KK Financial Statement Overview

Summary

Soliton Systems KK demonstrates strong financial health with consistent revenue and profit margins, a robust equity foundation, and healthy cash flow generation. While there are signs of operational efficiency challenges, notably in recent EBIT and EBITDA margins, the company remains well-positioned with low leverage and effective capital management.

Income Statement

Soliton Systems KK has shown consistent revenue growth over the years, although there was a slight dip in 2024. The gross profit margin has remained robust, indicating effective cost management, while the net profit margin has been strong, showcasing profitability. However, the recent decline in both EBIT and EBITDA margins suggests potential challenges in operational efficiency.

Balance Sheet

The company maintains a healthy equity position with a strong equity ratio and low debt levels, as evidenced by a favorable debt-to-equity ratio. Return on Equity (ROE) is impressive, indicating effective use of equity capital to generate profits. Overall, the balance sheet reflects financial stability and low leverage risk.

Cash Flow

Operating cash flow has shown resilience, although there has been a decrease in 2024. The company has maintained positive free cash flow, which is a strong indicator of liquidity. However, the decline in free cash flow growth rate indicates potential challenges in generating cash surplus compared to previous years.

Breakdown	TTM	Dec 2024	Dec 2023	Dec 2022	Dec 2021	Dec 2020
Income Statement
Total Revenue	18.77B	18.61B	19.06B	19.76B	17.39B	16.46B
Gross Profit	8.39B	8.29B	8.56B	7.63B	7.82B	7.55B
EBITDA	2.46B	2.52B	3.12B	2.77B	2.98B	1.90B
Net Income	1.72B	1.73B	1.94B	1.59B	1.87B	1.48B
Balance Sheet
Total Assets	23.25B	23.29B	22.62B	19.26B	17.30B	16.01B
Cash, Cash Equivalents and Short-Term Investments	15.38B	14.69B	13.39B	10.22B	8.50B	7.30B
Total Debt	171.00M	191.00M	133.00M	157.00M	157.00M	292.00M
Total Liabilities	11.15B	11.00B	11.49B	9.65B	8.83B	8.98B
Stockholders Equity	12.08B	12.27B	11.12B	9.60B	8.46B	7.01B
Cash Flow
Free Cash Flow	0.00	1.84B	3.14B	2.00B	1.75B	1.53B
Operating Cash Flow	0.00	2.04B	3.64B	2.30B	2.08B	2.62B
Investing Cash Flow	0.00	-237.00M	-57.00M	-305.00M	-464.00M	-1.12B
Financing Cash Flow	0.00	-507.00M	-397.00M	-252.00M	-481.00M	-1.10B

Soliton Systems KK Technical Analysis

• Technical Analysis Sentiment: Neutral
• Last Price: 2046.00
• 50DMA: Negative
• 100DMA: Positive
• 200DMA: Positive
• MACD: Positive
• RSI: Neutral
• STOCH: Positive

Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For JP:3040, the sentiment is Neutral. The current price of 2046 is below the 20-day moving average (MA) of 2053.80, above the 50-day MA of 1990.67, and above the 200-day MA of 1531.51, indicating a neutral trend. The MACD of -7.59 indicates Positive momentum. The RSI at 41.52 is Neutral, neither overbought nor oversold. The STOCH value of 17.37 is Positive, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Neutral sentiment for JP:3040.

Soliton Systems KK Peers Comparison

Name	Overall Rating	Market Cap	P/E Ratio	ROE	Dividend Yield	Revenue Growth	EPS Growth
3040	78 Outperform	¥36.13B	14.98	19.71%	3.09%	3.44%	79.35%
4493	78 Outperform	¥18.09B	26.25	―	0.17%	31.39%	13.12%
3741	75 Outperform	¥35.32B	25.12	―	1.74%	21.97%	15.89%
3992	66 Neutral	¥22.90B	24.21	―	2.26%	5.07%	10.80%
4847	65 Neutral	¥25.00B	19.43	―	3.62%	6.02%	-11.83%
3695	65 Neutral	¥8.79B	27.66	―	5.22%	26.41%	-20.60%
Sector *	61 Neutral	$37.18B	12.37	-10.20%	1.83%	8.50%	-7.62%

Soliton Systems KK Corporate Events

Soliton Systems K.K. Announces Upward Revision of 2025 Earnings and Dividend Forecast

Soliton Systems K.K. has revised its full-year earnings forecast for 2025, reporting an expected increase in net sales, operating profit, and net income due to strong performance in high-margin products and large-scale project acquisitions. The company also plans to increase its year-end dividend, reflecting its strategic focus on cybersecurity as a critical investment for business continuity and growth, aligning with government initiatives to strengthen cyber defense.

The most recent analyst rating on (JP:3040) stock is a Buy with a Yen2020.00 price target. To see the full list of analyst forecasts on Soliton Systems KK stock, see the JP:3040 Stock Forecast page.

Soliton Systems KK Corrects Financial Results Translation

Soliton Systems KK announced corrections to the English translation of its consolidated financial results for the nine months ended September 30, 2025. The corrections address clerical errors in the translation, specifically changing references from ‘Six Months ended’ to ‘Nine Months ended.’ These changes do not affect the original Japanese document, ensuring accuracy in the company’s financial reporting for stakeholders.

The most recent analyst rating on (JP:3040) stock is a Buy with a Yen2020.00 price target. To see the full list of analyst forecasts on Soliton Systems KK stock, see the JP:3040 Stock Forecast page.

Soliton Systems Reports Strong Financial Growth in 2025

Soliton Systems K.K. reported a significant improvement in its financial performance for the nine months ending September 30, 2025, with net sales increasing by 5% and operating profit surging by 79% compared to the previous year. The company’s strong financial results reflect its effective market strategies and robust demand for its IT security solutions, positioning it favorably in the competitive technology industry.

The most recent analyst rating on (JP:3040) stock is a Buy with a Yen1848.00 price target. To see the full list of analyst forecasts on Soliton Systems KK stock, see the JP:3040 Stock Forecast page.