Recomm Co., Ltd. (3323) AI Stock Analysis

• Market Cap: ¥9.80B
• Dividend Yield: 1.23%
• Average Volume (3M): 18.13M
• Price to Earnings (P/E): 49.3
• Beta (1Y): 0.37
• Revenue Growth: 11.99%
• EPS Growth: 177.55%
• Country: JP
• Employees: 514
• Sector: Communication Services
• Sector Strength: 97
• Industry: Telecommunications Services
• EPS (TTM): 0.46
• Shares Outstanding: 82,670,260
• 10 Day Avg. Volume: 3,165,470
• 30 Day Avg. Volume: 18,127,693
• PEG Ratio: 0.26
• Price to Book (P/B): 2.11
• Price to Sales (P/S): 0.82
• P/FCF Ratio: 41.49
• 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: 55 Neutral
• Price Target: ¥114.00 ▲(44.30% Upside)

Overall score is weighed down primarily by weak cash flow quality and negative revenue growth, despite improving margins. Technicals are supportive with a clear uptrend, but elevated RSI suggests overheating risk. High P/E and a modest dividend yield further limit the score.

Positive Factors

Improving Profitability Margins

Sustained improvement in EBITDA and net margins indicates better operational efficiency and cost management. Over a 2-6 month horizon, higher margins can support resilience through revenue volatility, provide margin headroom for reinvestment, and improve the odds of converting profits into cash if maintained.

Balanced Capital Structure

An equity ratio near 40% suggests the company retains a mix of debt and equity financing that provides flexibility. Structurally, this helps absorb shocks, supports access to additional financing for network investment, and reduces immediate bankruptcy risk compared with highly leveraged peers over the medium term.

Low Market Volatility (Beta)

A low beta implies limited sensitivity to broad market swings, aiding predictable financing costs and allowing management to focus on operational initiatives. For long-term planning and capital allocation in telecoms, lower systematic volatility can reduce refinancing stress and support steady strategic execution.

Negative Factors

Severe Cash Flow Weakness

Dramatically deteriorated free cash flow and almost zero cash conversion from earnings materially weaken the firm's ability to fund capex, service debt, or return capital. This is a structural vulnerability that forces external financing and constrains strategic options until cash generation recovers.

Rising Leverage

Elevated debt-to-equity raises fixed obligations and increases financial risk, especially if earnings or cash flows soften. Over several months, higher leverage constrains investment flexibility, raises refinancing risk, and amplifies downside for equity holders until deleveraging or earnings improvement occurs.

Negative Revenue Trend

A declining top line signals demand loss or competitive pressure that can erode scale economies and make maintaining margins harder. If revenue contraction persists, operational gains may be offset by shrinking scale, impairing long-term profitability and cash flow unless new growth drivers are implemented.

Recomm Co., Ltd. Business Overview & Revenue Model

Company Description

Recomm Co., Ltd. (3323) is a Japanese company primarily engaged in the development and provision of recommendation systems and data analytics services. The company operates in the technology sector, focusing on enhancing user experiences through personalized content delivery and product recommendations. Recomm's core offerings include software solutions that leverage artificial intelligence and machine learning to analyze consumer behavior and preferences, helping businesses optimize their marketing strategies and improve customer engagement.

How the Company Makes Money

Recomm Co., Ltd. generates revenue through a combination of software licensing fees, subscription services, and consulting services related to data analytics. The company charges clients for access to its recommendation engine and analytics tools, typically on a subscription basis, allowing businesses to integrate these solutions into their existing systems. Additionally, Recomm may offer bespoke consulting services to help clients implement and maximize the effectiveness of their recommendation systems. Strategic partnerships with e-commerce platforms and other technology providers enable Recomm to expand its market reach and enhance its service offerings, contributing to its revenue growth.

Recomm Co., Ltd. Financial Statement Overview

Summary

Mixed fundamentals: profitability margins improved (EBITDA 5.09%, net margin 1.44%), but revenue growth is negative (-2.21%) and leverage is higher (debt-to-equity 1.05). Cash flow is the biggest weakness, with sharply deteriorating free cash flow growth and very weak cash conversion (operating cash flow to net income 0.014).

Income Statement

Recomm Co., Ltd. has shown a mixed performance in its income statement. The company experienced a slight decline in gross profit margin to 23.11% in TTM, indicating pressure on cost management. The net profit margin improved to 1.44% in TTM, reflecting better profitability compared to the previous year. However, revenue growth has turned negative at -2.21%, signaling potential challenges in market expansion or competition. EBIT and EBITDA margins have improved to 3.66% and 5.09% respectively, suggesting operational efficiency gains.

Balance Sheet

The balance sheet of Recomm Co., Ltd. shows a moderate financial position. The debt-to-equity ratio increased to 1.05 in TTM, indicating higher leverage and potential risk if earnings do not improve. Return on equity is relatively low at 3.92%, suggesting limited returns for shareholders. The equity ratio stands at 39.95%, reflecting a balanced capital structure but with room for improvement in equity financing.

Cash Flow

The cash flow statement reveals significant challenges for Recomm Co., Ltd. Free cash flow growth has drastically declined by over 500% in TTM, raising concerns about cash generation capabilities. The operating cash flow to net income ratio is low at 0.014, indicating weak cash conversion from earnings. Additionally, the negative free cash flow to net income ratio suggests the company is struggling to generate free cash flow relative to its net income.

Breakdown	TTM	Dec 2025	Dec 2024	Dec 2023	Dec 2022	Dec 2021
Income Statement
Total Revenue	13.09B	13.09B	11.69B	9.51B	8.92B	6.63B
Gross Profit	2.88B	2.88B	2.87B	2.43B	2.61B	2.45B
EBITDA	774.57M	774.57M	464.08M	689.74M	619.13M	387.54M
Net Income	231.63M	232.18M	83.94M	314.85M	351.55M	-316.52M
Balance Sheet
Total Assets	12.74B	12.74B	12.65B	10.84B	9.24B	8.25B
Cash, Cash Equivalents and Short-Term Investments	2.68B	2.68B	3.06B	2.69B	2.84B	3.10B
Total Debt	4.86B	4.86B	4.83B	3.51B	2.48B	2.13B
Total Liabilities	7.29B	7.29B	7.35B	5.89B	4.60B	4.07B
Stockholders Equity	5.09B	5.09B	4.96B	4.69B	4.33B	3.68B
Cash Flow
Free Cash Flow	260.57M	259.31M	787.38M	-147.06M	197.12M	373.42M
Operating Cash Flow	472.58M	472.01M	841.61M	-104.76M	266.45M	391.47M
Investing Cash Flow	-332.63M	-332.63M	-1.35B	-843.76M	-536.57M	-242.43M
Financing Cash Flow	-443.79M	-443.06M	816.51M	876.37M	-262.07M	-558.73M

Recomm Co., Ltd. Technical Analysis

• Technical Analysis Sentiment: Positive
• Last Price: 79.00
• 50DMA: Positive
• 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:3323, the sentiment is Positive. The current price of 79 is below the 20-day moving average (MA) of 102.25, below the 50-day MA of 90.06, and below the 200-day MA of 90.35, indicating a bullish trend. The MACD of 6.95 indicates Negative momentum. The RSI at 61.44 is Neutral, neither overbought nor oversold. The STOCH value of 59.72 is Neutral, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Positive sentiment for JP:3323.

Recomm Co., Ltd. Peers Comparison

Name	Overall Rating	Market Cap	P/E Ratio	ROE	Dividend Yield	Revenue Growth	EPS Growth
4395	76 Outperform	¥8.54B	73.61	―	0.38%	17.63%	―
9445	75 Outperform	¥9.47B	10.29	―	3.85%	1.75%	24.87%
4415	67 Neutral	¥7.40B	17.00	―	―	39.18%	27.87%
3776	66 Neutral	¥11.86B	28.13	―	1.01%	17.19%	-43.91%
Sector *	60 Neutral	$48.67B	4.58	-11.27%	4.14%	2.83%	-41.78%
3323	55 Neutral	¥9.80B	49.35	―	1.23%	11.99%	177.55%
9421	45 Neutral	¥3.40B	64.68	―	―	4.84%	-54.50%