Sockets Inc. (3634) AI Stock Analysis

• Market Cap: ¥1.62B
• Dividend Yield: 0.42%
• Average Volume (3M): 6.35K
• Price to Earnings (P/E): ―
• Beta (1Y): 0.53
• Revenue Growth: 6.81%
• EPS Growth: 62.28%
• Country: JP
• Employees: 73
• Sector: Technology
• Sector Strength: 88
• Industry: Information Technology Services
• EPS (TTM): 8.03
• Shares Outstanding: 2,477,400
• 10 Day Avg. Volume: 2,380
• 30 Day Avg. Volume: 6,350
• PEG Ratio: N/A
• Price to Book (P/B): N/A
• Price to Sales (P/S): N/A
• P/FCF Ratio: N/A
• 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: 44 Neutral
• Price Target: ¥669.00 ▼(-3.74% Downside)

The score is held down primarily by weak financial performance, driven by persistent and widening losses and sustained negative free cash flow despite healthy gross margins. Technical indicators also lean bearish with price below key short/mid-term averages and negative momentum. Valuation provides only modest support because losses (negative P/E) reduce the usefulness of earnings-based valuation and the dividend yield is low.

Positive Factors

Conservative Balance Sheet

A debt-free balance sheet reduces financial risk and provides flexibility, allowing the company to navigate economic uncertainties without the burden of interest payments.

Revenue Growth

Stable revenue growth indicates resilience and potential for future expansion, suggesting the company can maintain its market position despite profitability challenges.

Healthy Gross Margins

Strong gross margins suggest efficient cost management at the production level, providing a foundation for potential profitability if operating costs are controlled.

Negative Factors

Widening Net Losses

Increasing net losses indicate deteriorating profitability, which can erode shareholder value and limit reinvestment opportunities, impacting long-term growth.

Negative Cash Flow

Persistent negative cash flow suggests the company is not generating sufficient internal funds to support operations, raising concerns about liquidity and financial sustainability.

Declining Equity

Declining equity due to ongoing losses reduces shareholder value and financial resilience, potentially limiting future growth and investment capacity.

Sockets Inc. Business Overview & Revenue Model

Company Description

Sockets Inc. engages in the development and provision of services, applications, and database for Internet platforms. It offers data services, cross-media recommendation, emotional metadata analysis services, specialized search services, integral system development and construction, and database service planning and developing. The company was incorporated in 2000 and is based in Tokyo, Japan.

How the Company Makes Money

Sockets Inc. generates revenue through the sale of its electronic components and software solutions. The company has established key partnerships with various electronics manufacturers and distributors, allowing it to reach a wide market. Revenue streams include direct sales of its proprietary products, licensing fees from software tools, and long-term supply contracts with major industry players. Additionally, Sockets Inc. benefits from providing custom engineering services and technical support to its clients, further contributing to its earnings.

Sockets Inc. Financial Statement Overview

Summary

Sockets Inc. demonstrates financial stability with no debt and a strong equity position. However, it struggles with profitability and cash flow generation, as indicated by negative revenue growth and profitability margins. The company needs to focus on improving operational efficiency and generating positive cash flows.

Income Statement

The company has faced declining revenues over the past year, with a revenue decrease of approximately 1.5%. Both Gross Profit Margin and Net Profit Margin are negative, indicating operational inefficiencies and a lack of profitability. The EBIT and EBITDA margins have also been negative, showing ongoing challenges in controlling operating costs.

Balance Sheet

The company maintains a strong equity position with no debt, indicated by a Debt-to-Equity Ratio of 0. The Equity Ratio stands at 72.73%, reflecting financial stability and resilience. However, the negative Return on Equity of -14.2% highlights profitability challenges.

Cash Flow

The Free Cash Flow is negative, but there has been a significant improvement in Operating Cash Flow compared to previous periods. The Operating Cash Flow to Net Income Ratio shows improvement, although Free Cash Flow to Net Income Ratio remains unfavorable, indicating challenges in generating free cash flow from operations.

Breakdown	Dec 2024	Dec 2023	Dec 2022	Dec 2021	Dec 2020
Income Statement
Total Revenue	1.04B	1.02B	994.61M	873.19M	994.29M
Gross Profit	475.93M	468.71M	506.26M	425.49M	469.92M
EBITDA	-138.50M	-79.15M	-27.82M	-83.17M	9.53M
Net Income	-139.13M	-100.26M	-26.89M	-150.24M	-51.44M
Balance Sheet
Total Assets	814.73M	970.85M	1.04B	1.05B	1.21B
Cash, Cash Equivalents and Short-Term Investments	464.96M	678.66M	722.56M	788.11M	793.97M
Total Debt	0.00	0.00	0.00	0.00	0.00
Total Liabilities	262.48M	264.80M	224.33M	200.01M	203.76M
Stockholders Equity	552.25M	706.05M	813.05M	854.64M	1.00B
Cash Flow
Free Cash Flow	-151.98M	-15.73M	-55.59M	-23.87M	35.71M
Operating Cash Flow	-151.77M	-14.86M	-44.79M	-14.06M	57.28M
Investing Cash Flow	-54.59M	-21.63M	-13.40M	15.52M	-21.57M
Financing Cash Flow	-7.33M	-7.42M	-7.36M	-7.33M	-7.36M

Sockets Inc. Technical Analysis

• Technical Analysis Sentiment: Negative
• Last Price: 695.00
• 50DMA: Negative
• 100DMA: Negative
• 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:3634, the sentiment is Negative. The current price of 695 is below the 20-day moving average (MA) of 699.80, below the 50-day MA of 703.60, and above the 200-day MA of 637.34, indicating a neutral trend. The MACD of -12.71 indicates Positive momentum. The RSI at 37.67 is Neutral, neither overbought nor oversold. The STOCH value of 37.00 is Neutral, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Negative sentiment for JP:3634.

Sockets Inc. Peers Comparison

Name	Overall Rating	Market Cap	P/E Ratio	ROE	Dividend Yield	Revenue Growth	EPS Growth
9250	63 Neutral	¥1.33B	21.97	―	―	5.17%	―
Sector *	61 Neutral	$37.18B	12.37	-10.20%	1.83%	8.50%	-7.62%
3908	60 Neutral	¥1.42B	9.98	―	―	-10.98%	―
4316	54 Neutral	¥3.98B	-20.19	―	―	11.96%	-453.36%
9240	51 Neutral	¥2.77B	29.50	―	―	6.61%	12.06%
7093	45 Neutral	¥1.14B	-23.64	―	―	1.68%	73.17%
3634	44 Neutral	¥1.62B	-34.47	―	0.42%	6.81%	62.28%