Densan Co., Ltd. (3640) AI Stock Analysis

• Market Cap: ¥15.22B
• Dividend Yield: 1.23%
• Average Volume (3M): 48.27K
• Price to Earnings (P/E): 6.3
• Beta (1Y): 0.24
• Revenue Growth: 35.89%
• EPS Growth: 162.00%
• Country: JP
• Employees: 601
• Sector: Technology
• Sector Strength: 88
• Industry: Semiconductors
• EPS (TTM): 193.46
• Shares Outstanding: 5,837,200
• 10 Day Avg. Volume: 20,740
• 30 Day Avg. Volume: 48,270
• PEG Ratio: 0.06
• Price to Book (P/B): 0.74
• Price to Sales (P/S): 0.50
• P/FCF Ratio: 3.36
• 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: 80 Outperform
• Price Target: ¥3,830.00 ▲(25.37% Upside)

Densan Co., Ltd. scores highly due to its strong financial performance and attractive valuation. The positive technical indicators further support the stock's potential, although caution is advised due to signs of overbought conditions. The absence of earnings call data and corporate events does not impact the score.

Positive Factors

Revenue Growth

The company's robust revenue growth indicates successful business expansion and increased market share, supporting long-term sustainability.

Cash Flow Generation

Strong cash flow generation enhances financial flexibility, enabling investment in growth opportunities and resilience against economic downturns.

Profitability Margins

Improved profitability margins reflect efficient cost management and operational effectiveness, contributing to long-term financial health.

Negative Factors

Industry Competition

The highly competitive IT solutions market may pressure pricing and margins, challenging the company's ability to maintain its market position.

Dependence on Key Sectors

Reliance on specific sectors may expose the company to sector-specific downturns, affecting revenue stability and growth prospects.

Absence of Recent Corporate Events

Lack of recent corporate events may indicate missed opportunities for strategic partnerships or innovations, potentially limiting future growth.

Densan Co., Ltd. Business Overview & Revenue Model

Company Description

Densan Co., Ltd. operates as an information service company in Japan. The company operates in two segments, Public Sector and Industrial Field. The Public Sector segment engages in the development and sale of package systems, operation support, and machines; and provision of various services, such as equipment sales and information processing. It primarily serves local public and related organizations. The Industrial Field segment provides various services, including software development, equipment sales, and information processing primarily for private companies and medical/welfare institutions. It also provides Internet connection services for general individuals. The company also engages in the information processing and provision, information communication and storage, and operation/monitoring service businesses; development, sale, and rental and maintenance of software; and planning, design, development, and maintenance of information systems. In addition, it also plans, researches, develops, sells, rents, installs, and maintains information and communication equipment/information processing equipment and its peripherals, and operational software, as well as sells office consumables; manages and operates information systems, and outsources related operations; and rents space in the building. Further, the company engages in the installation work and maintenance of communication lines and electrical equipment; planning, development, and sale of digital contents comprising text, audio, still images, videos, etc.; and collection agency, worker dispatch, and parking lot rental businesses. Additionally, it provides education and guidance, and information system consulting and publishing services. The company was incorporated in 1966 and is headquartered in Nagano, Japan.

How the Company Makes Money

Densan Co., Ltd. generates revenue through several key streams, primarily from its systems integration services, which involve the design, implementation, and maintenance of IT systems for businesses. The company also earns income from software licensing and development, providing tailored applications to clients that require specific functionalities. Additionally, Densan capitalizes on consulting services, offering strategic advice to organizations looking to optimize their IT infrastructure and processes. Significant partnerships with technology vendors and collaboration with industry leaders enhance its product offerings and market reach, contributing to its overall earnings.

Densan Co., Ltd. Financial Statement Overview

Summary

Densan Co., Ltd. exhibits strong financial performance with impressive revenue growth, solid profitability margins, and robust cash flow generation. The company maintains a balanced capital structure with a reasonable level of debt, supporting financial stability.

Income Statement

Densan Co., Ltd. demonstrates strong revenue growth with a 17.3% increase from the previous year, indicating robust business expansion. The gross profit margin is healthy at 34.6%, and net profit margin improved significantly to 9.8% from 5.6% the previous year. The EBIT and EBITDA margins are also commendable at 13.4% and 18.5% respectively, showcasing efficient cost management and operational effectiveness.

Balance Sheet

The company has a moderate debt-to-equity ratio of 0.30, indicating a balanced financial leverage. The return on equity (ROE) is strong at 14.5%, reflecting effective use of equity to generate profits. The equity ratio is healthy at 59.2%, signifying a solid capital structure with a focus on equity financing.

Cash Flow

Densan Co., Ltd. shows a substantial increase in free cash flow by 521.7%, which is a positive indicator of its ability to generate cash. The operating cash flow to net income ratio stands at 1.61, suggesting efficient conversion of earnings into cash. The free cash flow to net income ratio is high at 1.52, reflecting strong cash profitability.

Breakdown	TTM	Dec 2024	Dec 2023	Dec 2022	Dec 2021	Dec 2020
Income Statement
Total Revenue	19.39B	18.74B	15.97B	17.80B	17.31B	16.10B
Gross Profit	6.29B	6.49B	5.53B	6.51B	4.69B	4.62B
EBITDA	3.64B	3.46B	2.03B	3.06B	2.08B	1.83B
Net Income	1.82B	1.84B	898.61M	1.61B	859.28M	599.05M
Balance Sheet
Total Assets	20.29B	21.46B	19.55B	20.18B	20.77B	19.74B
Cash, Cash Equivalents and Short-Term Investments	4.19B	2.55B	1.60B	2.98B	1.50B	678.00M
Total Debt	2.21B	3.85B	4.89B	6.25B	6.59B	7.76B
Total Liabilities	7.55B	8.75B	8.72B	11.26B	13.36B	13.02B
Stockholders Equity	12.74B	12.71B	10.83B	8.92B	7.41B	6.72B
Cash Flow
Free Cash Flow	0.00	2.79B	449.50M	1.05B	1.97B	-16.95M
Operating Cash Flow	0.00	2.97B	1.62B	1.46B	2.37B	589.22M
Investing Cash Flow	0.00	-930.29M	-1.41B	-432.90M	-540.78M	-642.27M
Financing Cash Flow	0.00	-1.29B	-194.26M	-1.20B	-1.01B	-5.02M

Densan Co., Ltd. Technical Analysis

• Technical Analysis Sentiment: Positive
• Last Price: 3055.00
• 50DMA: Negative
• 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:3640, the sentiment is Positive. The current price of 3055 is above the 20-day moving average (MA) of 2990.50, below the 50-day MA of 3102.38, and above the 200-day MA of 2616.14, indicating a neutral trend. The MACD of -14.08 indicates Negative momentum. The RSI at 51.28 is Neutral, neither overbought nor oversold. The STOCH value of 54.32 is Neutral, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Positive sentiment for JP:3640.

Densan Co., Ltd. Peers Comparison

Name	Overall Rating	Market Cap	P/E Ratio	ROE	Dividend Yield	Revenue Growth	EPS Growth
3640	80 Outperform	¥15.22B	6.32	―	1.23%	35.89%	162.00%
6337	75 Outperform	¥11.89B	23.23	―	3.47%	-14.79%	-41.15%
Sector *	61 Neutral	$37.18B	12.37	-10.20%	1.83%	8.50%	-7.62%
6730	61 Neutral	¥13.41B	11.82	―	3.70%	-10.61%	-18.70%
6616	45 Neutral	¥16.13B	-8.04	―	3.98%	-6.84%	50.71%
6613	44 Neutral	¥14.78B	-48.36	―	―	18.18%	56.08%
6769	43 Neutral	¥8.65B	1,225.30	―	1.86%	-7.54%	―