Tokai Senko K.K. (3577) AI Stock Analysis

• Market Cap: ¥3.23B
• Dividend Yield: 2.77%
• Average Volume (3M): 1.34K
• Price to Earnings (P/E): 9.8
• Beta (1Y): 0.31
• Revenue Growth: 6.31%
• EPS Growth: 33.36%
• Country: JP
• Employees: 777
• Sector: Consumer Cyclical
• Sector Strength: 84
• Industry: Apparel - Manufacturers
• EPS (TTM): 8.39
• Shares Outstanding: 3,614,252
• 10 Day Avg. Volume: 1,050
• 30 Day Avg. Volume: 1,343
• PEG Ratio: 0.07
• Price to Book (P/B): 0.42
• Price to Sales (P/S): 0.21
• P/FCF Ratio: 4.71
• 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: 69 Neutral
• Price Target: ¥1,087.00 ▲(20.64% Upside)

Tokai Senko K.K. shows strong financial performance with robust revenue growth and cash flow generation, contributing significantly to the overall score. The stock's valuation is attractive, with a low P/E ratio and a decent dividend yield. However, technical indicators suggest a bearish trend, which slightly offsets the positive financial and valuation aspects.

Positive Factors

Strong cash generation

Exceptional free cash flow growth and high operating cash conversion indicate durable internal funding for capex, maintenance contracts, or M&A. Strong cash generation reduces reliance on external financing and supports strategic reinvestment and shareholder returns over months.

Conservative balance sheet

Low leverage and a near-50% equity ratio give the company financial resilience against cyclical telecommunications spending downcycles. This structural strength preserves liquidity, supports investment flexibility, and lowers refinancing risk for the medium term.

Consistent revenue growth and margin improvement

Sustained revenue growth alongside improving gross and net margins reflects improving product mix and cost control. These trends suggest durable demand and operational improvements that can underpin higher sustainable earnings if maintained over upcoming quarters.

Negative Factors

Thin operating margins

A sub-3% EBIT margin is structurally low for a tech/telecom equipment provider, limiting internal funding for R&D, sales expansion, or cushioning input cost rises. Persistent thin margins constrain long-term profitability headroom without efficiency gains or higher-value offerings.

Low returns on equity

A low ROE signals limited effectiveness in generating returns from capital deployed. Over 2-6 months this suggests the company may struggle to deliver competitive shareholder returns unless ROE improves via higher margins, better asset turns, or capital redeployment.

Revenue concentration in hardware sales

Heavy reliance on equipment sales exposes the business to commoditization, price competition, and capex cyclicality. Without stronger high-margin services or scale advantages, this structural mix can pressure margins and revenue stability over the medium term.

Tokai Senko K.K. Business Overview & Revenue Model

Company Description

Tokai Senko K.K. engages in textile designing, printing, dyeing, and finishing activities. The company also develops and sells industrial machineries. Tokai Senko K.K. was founded in 1941 and is headquartered in Nagoya, Japan.

How the Company Makes Money

Tokai Senko K.K. generates revenue through multiple streams, primarily by selling telecommunications and IT equipment, including routers, switches, and other networking hardware. Additionally, the company offers installation and maintenance services for its products, which contribute significantly to its revenue. Key partnerships with major technology vendors and service providers enhance their market presence and allow for collaborative offerings, driving sales. Furthermore, ongoing contracts with businesses for IT solutions and support services provide a stable income flow, bolstering their overall earnings.

Tokai Senko K.K. Financial Statement Overview

Summary

Tokai Senko K.K. exhibits a positive financial performance with strong revenue growth and improved profitability margins. The balance sheet reflects a stable financial position with low leverage. The cash flow statement indicates strong cash generation, supporting future growth opportunities. While the company shows promising trends, there is room for improvement in operational efficiency and profitability.

Income Statement

Tokai Senko K.K. has shown a strong revenue growth rate of 8.6% from 2024 to 2025, indicating a positive trajectory in sales. The gross profit margin improved to 14.8% in 2025, reflecting better cost management. The net profit margin increased significantly to 2.2%, showing enhanced profitability. However, the EBIT margin of 2.9% suggests room for improvement in operational efficiency.

Balance Sheet

The company's debt-to-equity ratio decreased to 0.29, indicating a conservative leverage position. The return on equity improved to 4.4%, reflecting better utilization of shareholder funds. The equity ratio stands at 48.1%, suggesting a stable financial structure. However, the relatively low ROE indicates potential for further profitability enhancement.

Cash Flow

Tokai Senko K.K. demonstrated a robust free cash flow growth rate of 108.5%, highlighting strong cash generation capabilities. The operating cash flow to net income ratio of 2.6 suggests efficient cash conversion from operations. The free cash flow to net income ratio of 2.0 further underscores the company's strong cash flow position.

Breakdown	TTM	Dec 2024	Dec 2023	Dec 2022	Dec 2021	Dec 2020
Income Statement
Total Revenue	14.41B	14.35B	13.22B	13.06B	11.14B	10.62B
Gross Profit	2.18B	2.13B	1.65B	1.54B	1.50B	1.37B
EBITDA	1.27B	1.14B	781.40M	623.25M	609.47M	397.93M
Net Income	301.33M	311.71M	129.81M	-100.91M	48.49M	-174.33M
Balance Sheet
Total Assets	14.30B	14.89B	14.55B	13.94B	13.38B	12.91B
Cash, Cash Equivalents and Short-Term Investments	3.15B	3.07B	2.68B	2.50B	2.32B	2.27B
Total Debt	2.29B	2.11B	2.52B	2.83B	2.65B	2.53B
Total Liabilities	6.04B	6.30B	6.54B	6.62B	6.23B	6.05B
Stockholders Equity	7.00B	7.17B	6.84B	6.23B	6.19B	6.05B
Cash Flow
Free Cash Flow	0.00	635.39M	304.80M	-100.86M	-181.54M	-158.43M
Operating Cash Flow	0.00	808.81M	531.06M	189.36M	57.18M	319.79M
Investing Cash Flow	0.00	-41.56M	-19.98M	-99.13M	123.23M	-359.96M
Financing Cash Flow	0.00	-487.47M	-439.78M	26.95M	-49.40M	-114.31M

Tokai Senko K.K. Technical Analysis

• Technical Analysis Sentiment: Positive
• Last Price: 901.00
• 50DMA: Positive
• 100DMA: Positive
• 200DMA: Positive
• MACD: Negative
• RSI: Negative
• STOCH: Negative

Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For JP:3577, the sentiment is Positive. The current price of 901 is below the 20-day moving average (MA) of 965.05, below the 50-day MA of 923.02, and above the 200-day MA of 900.48, indicating a bullish trend. The MACD of 23.00 indicates Negative momentum. The RSI at 81.72 is Negative, neither overbought nor oversold. The STOCH value of 93.33 is Negative, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Positive sentiment for JP:3577.

Tokai Senko K.K. Peers Comparison

Name	Overall Rating	Market Cap	P/E Ratio	ROE	Dividend Yield	Revenue Growth	EPS Growth
3580	79 Outperform	¥33.24B	23.27	―	3.23%	6.98%	-42.05%
3104	75 Outperform	¥95.52B	19.12	―	1.79%	10.76%	54.82%
3201	74 Outperform	¥114.32B	14.07	―	2.66%	7.56%	-17.12%
3109	72 Outperform	¥13.39B	14.40	―	4.80%	4.49%	26.84%
3577	69 Neutral	¥3.23B	9.84	―	2.77%	6.31%	33.36%
Sector *	61 Neutral	$18.38B	12.79	-2.54%	3.03%	1.52%	-15.83%