Soliton Systems KK (3040) AI Stock Analysis

• Market Cap: ¥36.91B
• Dividend Yield: 3.09%
• Average Volume (3M): 114.60K
• Price to Earnings (P/E): 16.1
• Beta (1Y): 0.77
• Revenue Growth: 3.44%
• EPS Growth: 79.35%
• Country: JP
• Employees: 678
• Sector: Technology
• Sector Strength: 88
• Industry: Software - Infrastructure
• EPS (TTM): 47.61
• Shares Outstanding: 19,738,888
• 10 Day Avg. Volume: 100,740
• 30 Day Avg. Volume: 114,603
• PEG Ratio: 0.50
• Price to Book (P/B): 2.88
• Price to Sales (P/S): 1.93
• P/FCF Ratio: 11.11
• 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: 73 Outperform
• Price Target: ¥2,071.00 ▲(1.22% Upside)
• Action: Reiterated Date: 02/25/26
• Date: Action: Reiterated 02/25/26

The score is driven primarily by strong financial performance (low leverage, improving margins, solid ROE). This is partially offset by weak technical conditions (below key moving averages and negative MACD). Valuation is reasonable with a meaningful dividend yield, supporting an overall mid-to-high score.

Positive Factors

Conservative balance sheet

Very low leverage and a rising equity base give the company durable financial flexibility. This reduces insolvency risk and supports strategic spending, acquisitions or dividend policy without relying on market financing, improving resilience over the next several months.

Improving profitability

Sustained margin expansion and higher EBIT margins signal improving unit economics and pricing or cost control advantages. Stronger margins increase cash available for reinvestment and buffer the business against revenue swings, supporting durable earnings power.

Healthy cash conversion & ROE

High free cash flow conversion and mid-to-high teen ROE indicate efficient capital allocation and real cash profitability. Reliable cash generation supports dividends, R&D and balance-sheet strength, sustaining operating stability over a multi-month horizon.

Negative Factors

Revenue / cash inconsistency

Choppy revenue and cash patterns reduce visibility for planning and weaken the predictability of earnings. Persistent inconsistency can force conservative capital decisions, hinder long-term contracts or hiring, and raise execution risk over coming quarters.

Prior multi-year revenue declines

A multi-year revenue trough followed by a modest rebound suggests structural demand or competitive challenges. Unless growth proves sustainable, the company may struggle to scale fixed-cost leverage, limiting durable top-line momentum in the medium term.

Cash-flow volatility / working-capital

Material swings in free cash flow tied to working-capital or timing effects undermine predictability of funds for investment or payouts. Even with low leverage, volatility can force short-term financing or deferred projects, elevating operational risk over several quarters.

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

Strong financial quality overall: profitability improved (gross margin ~39% in 2022 to ~47% in 2025; net margin ~11.6% in 2025) and the balance sheet is exceptionally conservative (debt-to-equity ~0.7% in 2025) with solid ROE (~17.3% in 2025). Main drawback is uneven revenue and cash-flow consistency year-to-year.

Income Statement

Profitability is solid and improving: gross margin expanded from ~39% (2022) to ~47% (2025), while net margin improved to ~11.6% (2025) from ~9.3% (2024). EBIT margin also strengthened to ~14.4% (2025). The main weakness is growth consistency—revenue declined in 2023 and 2024 before rebounding to +5.3% in 2025, indicating a choppy top-line trajectory despite better margins.

Balance Sheet

The balance sheet is exceptionally conservative with very low leverage (debt-to-equity ~0.7% in 2025, down from ~4.2% in 2020) and a steadily rising equity base (¥7.0B in 2020 to ¥13.2B in 2025). Returns on equity are consistently strong (mid-to-high teens in recent years, ~17.3% in 2025). The primary limitation is that the analysis is constrained by the lack of liquidity detail, but based on leverage and equity growth, financial risk appears low.

Cash Flow

Cash generation is healthy, with free cash flow consistently positive and close to reported earnings (free cash flow to net income ~0.95 in 2025). Operating cash flow and free cash flow both stepped up materially in 2025 versus 2024. The key weakness is volatility—free cash flow growth swung sharply negative in 2024 and the operating cash flow figure is not consistently large relative to the revenue base, suggesting working-capital or timing effects can meaningfully impact annual cash results.

Breakdown	TTM	Dec 2025	Dec 2024	Dec 2023	Dec 2022	Dec 2021
Income Statement
Total Revenue	18.77B	19.76B	18.61B	19.06B	19.76B	17.39B
Gross Profit	8.39B	9.24B	8.29B	8.56B	7.63B	7.82B
EBITDA	2.46B	3.16B	2.52B	3.12B	2.77B	2.98B
Net Income	1.72B	2.30B	1.73B	1.94B	1.59B	1.87B
Balance Sheet
Total Assets	23.25B	26.23B	23.29B	22.62B	19.26B	17.30B
Cash, Cash Equivalents and Short-Term Investments	15.38B	16.86B	14.69B	13.39B	10.22B	8.50B
Total Debt	171.00M	97.00M	191.00M	133.00M	157.00M	157.00M
Total Liabilities	11.15B	12.97B	11.00B	11.49B	9.65B	8.83B
Stockholders Equity	12.08B	13.25B	12.27B	11.12B	9.60B	8.46B
Cash Flow
Free Cash Flow	0.00	3.43B	1.84B	3.14B	2.00B	1.75B
Operating Cash Flow	0.00	3.60B	2.04B	3.64B	2.30B	2.08B
Investing Cash Flow	0.00	-10.17B	-237.00M	-57.00M	-305.00M	-464.00M
Financing Cash Flow	0.00	-1.27B	-507.00M	-397.00M	-252.00M	-481.00M

Soliton Systems KK Technical Analysis

• Technical Analysis Sentiment: Positive
• Last Price: 2046.00
• 50DMA: Negative
• 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:3040, the sentiment is Positive. The current price of 2046 is above the 20-day moving average (MA) of 1995.40, above the 50-day MA of 2030.66, and above the 200-day MA of 1611.84, indicating a neutral trend. The MACD of -11.50 indicates Positive momentum. The RSI at 49.38 is Neutral, neither overbought nor oversold. The STOCH value of 44.72 is Neutral, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Positive 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	73 Outperform	¥36.91B	16.09	19.71%	3.09%	3.44%	79.35%
3694	68 Neutral	¥25.63B	20.71	―	―	6.33%	14.82%
4475	68 Neutral	¥32.66B	24.33	―	0.39%	30.59%	65.14%
4493	67 Neutral	¥16.78B	20.22	―	0.17%	31.39%	13.12%
4417	65 Neutral	¥40.97B	31.12	―	0.90%	25.06%	37.24%
147A	62 Neutral	¥46.05B	44.77	―	―	―	―
Sector *	61 Neutral	$37.18B	12.37	-10.20%	1.83%	8.50%	-7.62%

Soliton Systems KK Corporate Events

Soliton Systems Delivers Strong 2025 Earnings and Hikes Dividend

Soliton Systems reported consolidated net sales of ¥19.8 billion for the year ended December 31, 2025, a 6.2% increase, with operating profit jumping 39.2% to ¥2.8 billion and profit attributable to owners of the parent rising 33.2% to ¥2.3 billion. Profitability indicators improved, including operating margin and return on equity, while total assets expanded and the equity ratio stayed around 50%, signaling a stronger balance sheet.

The company raised its annual dividend to ¥54 per share for 2025 from ¥52 a year earlier and plans a further increase to ¥60 in 2026, indicating confidence in earnings sustainability and a continued focus on shareholder returns. For 2026, Soliton forecasts net sales of ¥21.2 billion and operating profit of ¥3.15 billion, implying moderate growth on top of the strong 2025 rebound and suggesting steady business momentum in its core IT and security markets.

The most recent analyst rating on (JP:3040) stock is a Buy with a Yen2241.00 price target. To see the full list of analyst forecasts on Soliton Systems KK stock, see the JP:3040 Stock Forecast page.

Soliton Systems 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.