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

• Market Cap: ¥3.26B
• Dividend Yield: 2.77%
• Average Volume (3M): 1.34K
• Price to Earnings (P/E): 3.9
• Beta (1Y): 0.29
• Revenue Growth: 6.31%
• EPS Growth: 33.36%
• Country: JP
• Employees: 777
• Sector: Consumer Cyclical
• Sector Strength: 84
• Industry: Apparel - Manufacturers
• EPS (TTM): 57.63
• 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: ¥1,097.00 ▲(21.75% Upside)
• Action: Downgraded Date: 10/29/25
• Date: Action: Downgraded 10/29/25

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

Cash Generation

Exceptional free cash flow growth (108.5%) and a high operating cash flow to net income ratio (2.6) show durable conversion of earnings into cash. Reliable cash generation supports capex, maintenance of service contracts, dividend capacity, debt reduction and funding of strategic investments.

Conservative Balance Sheet

A low debt-to-equity ratio (0.29) and ~48% equity ratio indicate a conservative capital structure that reduces financial stress in downturns. This preserves borrowing capacity for strategic investments, supports long-term contracts, and provides resilience without jeopardizing operations.

Revenue Growth & Margin Improvement

Sustained revenue growth (8.6% year) alongside improved gross (14.8%) and net margins (2.2%) signals durable demand and better cost control. Margin expansion with top-line growth supports reinvestment in products and services and strengthens competitive positioning over the medium term.

Negative Factors

Low Return on Equity

ROE at ~4.4% remains low relative to typical corporate benchmarks, indicating limited efficiency in converting equity into profit. Persistently low ROE can constrain shareholder returns, limit attractiveness to investors, and suggest management needs to improve asset utilization or strategy.

Thin Operating Profitability

An EBIT margin of about 2.9% points to thin operating profitability, leaving limited buffer against rising costs. Low operating margins constrain the company’s ability to invest in R&D, scale services, or absorb input-price shocks, making long-term margin improvement critical for durable competitiveness.

Modest Net Margin

A net margin near 2.2% is modest; after financing and taxes the retained earnings cushion is small. This limits the company’s capacity to self-fund larger strategic initiatives, reduces shock absorption in downturns, and may necessitate external funding for material expansion.

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	Mar 2025	Mar 2024	Mar 2023	Mar 2022	Mar 2021
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: Positive
• RSI: Neutral
• STOCH: Neutral

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 999.95, below the 50-day MA of 974.18, and below the 200-day MA of 910.95, indicating a bullish trend. The MACD of 6.78 indicates Positive momentum. The RSI at 65.04 is Neutral, neither overbought nor oversold. The STOCH value of 68.15 is Neutral, 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
3569	78 Outperform	¥186.71B	9.78	10.24%	2.43%	6.08%	8.55%
3104	75 Outperform	¥116.37B	15.30	―	1.79%	10.76%	54.82%
3109	72 Outperform	¥13.85B	4.54	―	4.80%	4.49%	26.84%
3577	69 Neutral	¥3.26B	3.91	―	2.77%	6.31%	33.36%
Sector *	61 Neutral	$18.38B	12.79	-2.54%	3.03%	1.52%	-15.83%
3202	57 Neutral	¥4.11B	14.35	―	2.63%	-3.01%	-65.96%
3409	44 Neutral	¥3.60B	-40.43	―	―	16.33%	75.48%