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

• Market Cap: ¥7.19B
• Dividend Yield: 1.23%
• Average Volume (3M): 18.13M
• Price to Earnings (P/E): ―
• Beta (1Y): 0.47
• 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: 0.40
• Price to Book (P/B): 2.13
• 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: 49 Neutral
• Price Target: ¥98.00 ▲(24.05% Upside)
• Action: Reiterated Date: 02/18/26
• Date: Action: Reiterated 02/18/26

The score is held back primarily by weak and volatile cash-flow trends alongside elevated leverage, which reduces financial flexibility. Technicals are mixed but generally soft (below the 20-day average with subdued momentum). Valuation is the largest headwind, with a very high P/E and only a modest dividend yield.

Positive Factors

Improved ROE and equity base

Equity growth and a mid-single-digit ROE that improved versus FY2024 indicate the company has strengthened its capital base and is extracting better returns on that equity. This durable improvement suggests management has improved asset allocation and provides a modest buffer for reinvestment and solvency over months.

Margin recovery vs prior year

Gross margin near 22% and recent improvement in operating and net profitability versus FY2024 suggest better pricing or cost control. If sustained, this enhances long-term margin sustainability and provides some earnings cushion against revenue softness, supporting operational durability over the medium term.

Low earnings volatility (low beta)

A low beta (~0.36) points to lower equity volatility and typically reflects steadier underlying cash flows or defensive demand. For a telecom business, lower market sensitivity supports predictable operating performance and planning, reducing the likelihood of large short-term swings in results over several months.

Negative Factors

Elevated leverage

Debt near parity with equity and rising leverage materially reduces financial flexibility. Over a multi-month horizon this raises refinancing, interest-cost, and covenant risks, constraining the firm's ability to invest, absorb shocks, or pursue strategic opportunities without altering capital structure or operational cash generation.

Weak and volatile cash generation

A ~58% drop in FCF and historically volatile operating cash (including a year of negative cash flow) signal unreliable internal funding. Over 2–6 months this limits the company's ability to pay down debt, fund capex, or absorb earnings volatility without external financing, increasing execution and funding risk.

Flat-to-declining revenue and slim net margin

TTM revenue roughly flat to down and a thin ~2% net margin leave limited earnings cushion. With modest top-line momentum and low net profitability, the company is more exposed to demand shocks or cost inflation, making sustainable earnings and reinvestment capacity fragile over the medium term.

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

Income statement performance is modest (flat-to-down TTM revenue and ~2% net margin) despite improvement versus FY2024. Balance sheet leverage is elevated (debt near equity), limiting flexibility. Cash flow is the key drag, with sharply lower free cash flow and weaker cash conversion, increasing funding and execution risk.

Income Statement

TTM (Trailing-Twelve-Months) revenue is essentially flat to down (about -2% growth), and profitability is modest with roughly ~22% gross margin and ~2% net margin. While margins improved versus FY2024 (notably stronger operating and net profitability), they remain well below FY2022–FY2023 levels, suggesting a less favorable mix/pricing environment and limited earnings cushion if revenue softens further.

Balance Sheet

Leverage is elevated, with debt running close to equity (debt-to-equity ~1.0 in the latest periods) and debt increasing versus earlier years, reducing financial flexibility. Equity has grown, and return on equity in the mid-single-digits is positive and improved from FY2024, but it remains moderate and below the stronger returns seen in FY2022–FY2023.

Cash Flow

Cash generation is positive in TTM (Trailing-Twelve-Months), but quality and momentum have weakened: free cash flow is down sharply (about -58% growth), and operating cash flow is low relative to reported earnings in recent periods. Free cash flow covers only about half of net income, and the history includes a year of negative operating and free cash flow (FY2023), indicating volatility and less dependable funding capacity for debt reduction or reinvestment.

Breakdown	TTM	Sep 2025	Sep 2024	Sep 2023	Sep 2022	Sep 2021
Income Statement
Total Revenue	12.82B	13.09B	11.69B	9.51B	8.92B	6.63B
Gross Profit	2.81B	2.95B	2.70B	2.29B	2.46B	2.31B
EBITDA	620.59M	695.98M	240.64M	343.91M	545.94M	532.65M
Net Income	131.77M	196.72M	83.94M	314.85M	351.54M	-316.52M
Balance Sheet
Total Assets	13.56B	12.70B	12.65B	10.84B	9.24B	8.25B
Cash, Cash Equivalents and Short-Term Investments	2.78B	2.68B	2.98B	2.63B	2.71B	2.99B
Total Debt	5.61B	4.86B	4.83B	3.51B	2.48B	2.13B
Total Liabilities	7.82B	7.29B	7.35B	5.89B	4.60B	4.07B
Stockholders Equity	5.39B	5.05B	4.96B	4.69B	4.33B	3.68B
Cash Flow
Free Cash Flow	109.87M	259.31M	787.38M	-147.06M	197.12M	373.42M
Operating Cash Flow	325.39M	472.01M	841.61M	-104.76M	266.45M	391.47M
Investing Cash Flow	-440.57M	-332.63M	-1.35B	-843.76M	-536.57M	-242.43M
Financing Cash Flow	-69.70M	-443.06M	816.51M	876.37M	-262.07M	-558.73M

Recomm Co., Ltd. Technical Analysis

• Technical Analysis Sentiment: Negative
• Last Price: 79.00
• 50DMA: Negative
• 100DMA: Negative
• 200DMA: Negative
• MACD: Positive
• RSI: Neutral
• STOCH: Positive

Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For JP:3323, the sentiment is Negative. The current price of 79 is below the 20-day moving average (MA) of 93.70, below the 50-day MA of 100.14, and below the 200-day MA of 94.64, indicating a bearish trend. The MACD of -2.75 indicates Positive momentum. The RSI at 39.40 is Neutral, neither overbought nor oversold. The STOCH value of 18.52 is Positive, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Negative sentiment for JP:3323.

Recomm Co., Ltd. Peers Comparison

Name	Overall Rating	Market Cap	P/E Ratio	ROE	Dividend Yield	Revenue Growth	EPS Growth
3834	80 Outperform	¥18.54B	13.52	―	3.53%	5.03%	-9.55%
9445	75 Outperform	¥9.52B	12.83	―	3.85%	1.75%	24.87%
9416	73 Outperform	¥56.44B	14.04	―	2.63%	12.85%	7.74%
9424	66 Neutral	¥21.52B	23.11	―	―	30.15%	31.28%
Sector *	60 Neutral	$48.67B	4.58	-11.27%	4.14%	2.83%	-41.78%
9449	56 Neutral	¥292.28B	24.87	17.97%	1.36%	4.75%	17.02%
3323	49 Neutral	¥7.19B	-44.25	―	1.23%	11.99%	177.55%