Softmax Co., Ltd. (Japan) (3671) AI Stock Analysis

• Market Cap: ¥8.20B
• Dividend Yield: 8.09%
• Average Volume (3M): 140.46K
• Price to Earnings (P/E): 12.1
• Beta (1Y): 0.42
• Revenue Growth: 32.95%
• EPS Growth: 45.22%
• Country: JP
• Employees: 220
• Sector: Healthcare
• Sector Strength: 45
• Industry: Medical - Healthcare Information Services
• EPS (TTM): 3.72
• Shares Outstanding: 24,050,800
• 10 Day Avg. Volume: 144,320
• 30 Day Avg. Volume: 140,460
• PEG Ratio: 0.44
• Price to Book (P/B): 0.36
• Price to Sales (P/S): 0.23
• P/FCF Ratio: 2.01
• 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: 67 Neutral
• Price Target: ¥401.00 ▲(20.06% Upside)

Softmax Co., Ltd. has a strong financial performance, which is the most significant factor contributing to its overall score. The company's robust cash flow and profitability improvements are key strengths. However, the technical analysis indicates bearish momentum, which negatively impacts the score. The valuation is attractive, with a reasonable P/E ratio and high dividend yield, suggesting potential undervaluation. The absence of earnings call data and corporate events means these factors do not influence the score.

Positive Factors

Free cash flow strength

Substantially higher free cash flow and strong cash conversion (FCF/net income ~1.30, OCF/net income ~1.38) provide durable funding for capex, R&D, dividends or debt reduction, increasing financial flexibility and resilience across planning horizons of several months to years.

Improving profitability margins

Sustained margin expansion across gross, EBIT and net margins indicates better pricing, cost control or more efficient operations. These structural improvements enhance free cash generation and recurring profitability, supporting long-term investment and competitive positioning in healthcare IT services.

Solid balance sheet and ROE

Moderate leverage and a strong equity base coupled with a mid-teens ROE reflect prudent capital structure and effective capital deployment. This durable financial strength supports strategic initiatives, limits financing risk, and provides capacity for future M&A or product investment.

Negative Factors

Modest revenue growth

Low single-digit top-line growth constrains scale advantages and long-term earnings upside for a healthcare IT firm where scale and network effects drive adoption. Without faster revenue expansion, margin gains and cash generation may be harder to accelerate over the medium term.

Limited EBITDA improvement

Modest EBITDA margin progress and rising non-operating costs suggest operating leverage is not fully realized. Persistent non-op expenses can erode cash available for reinvestment and reduce the durability of profitability improvements unless management addresses underlying cost drivers.

Liabilities reduction needed

Although leverage is moderate, the balance sheet note on liability reduction highlights structural risk. Lowering liabilities would improve liquidity and the credit profile, reducing financial vulnerability and enabling steadier investment in product development and regulatory compliance over time.

Softmax Co., Ltd. (Japan) Business Overview & Revenue Model

Company Description

Softmax Co., Ltd develops, sales, introduction, and maintenance of corporate systems. It is also involved in medical information system development. The company also offers web based electronic medical record system, web based ordering system, medical accounting, radiology information, rehabilitation department system, health check-up system, nursing work management system, and surgical department system. Softmax Co., Ltd was incorporated in 1974 and is headquartered in Tokyo, Japan.

How the Company Makes Money

Softmax Co., Ltd. generates revenue through multiple streams, primarily from software licensing, subscription models, and consulting services. The company earns money by selling licenses for its proprietary software solutions, which are used by businesses to improve their operational efficiency. Additionally, Softmax offers subscription-based services for its cloud-based applications, providing customers with ongoing access to updates and support. Consulting services also contribute significantly to its revenue, as the company assists clients in integrating and customizing software solutions to meet their specific needs. Strategic partnerships with other technology firms and collaborations with industry leaders further enhance its market reach and create additional revenue opportunities.

Softmax Co., Ltd. (Japan) Financial Statement Overview

Summary

Softmax Co., Ltd. demonstrates strong financial health with consistent revenue growth and profitability improvements. The balance sheet is stable, with moderate leverage and a high equity ratio, while cash flows are robust, supporting operational and strategic initiatives. The company is well-positioned in the Medical - Healthcare Information Services industry, with potential to capitalize on future growth opportunities. However, continued focus on managing liabilities and cost efficiency will be essential to maintain this trajectory.

Income Statement

Softmax Co., Ltd. has shown impressive revenue growth, moving from 5.26 billion JPY in 2023 to 5.43 billion JPY in 2024, a growth rate of approximately 3.19%. The gross profit margin has improved from 29.75% to 30.78%, and the net profit margin increased from 8.59% to 8.84%. The EBIT margin also rose from 11.04% to 12.20%. These metrics suggest strong profitability and operational efficiency. However, the EBITDA margin increment is modest, indicating a slight increase in non-operating expenses.

Balance Sheet

The balance sheet shows a solid equity position with a debt-to-equity ratio of 0.40, reflecting moderate leverage. The company has a healthy equity ratio of 46.68%, indicating a strong asset base funded by equity. Return on equity (ROE) stands at 13.65%, showcasing efficient use of equity to generate profits. Nonetheless, there is room for improvement in reducing liabilities to further strengthen the financial structure.

Cash Flow

Softmax Co., Ltd. exhibits robust cash flow management, with free cash flow growing from 215 million JPY in 2023 to 624 million JPY in 2024, a significant growth rate of 190.23%. The operating cash flow to net income ratio is 1.38, and the free cash flow to net income ratio is 1.30, indicating effective conversion of income to cash. The company's strong cash position supports its ability to fund operations and invest in growth.

Breakdown	TTM	Dec 2024	Dec 2023	Dec 2022	Dec 2021	Dec 2020
Income Statement
Total Revenue	6.94B	5.43B	5.26B	5.05B	4.49B	4.02B
Gross Profit	1.88B	1.67B	1.57B	1.44B	1.45B	1.24B
EBITDA	962.17M	745.36M	658.89M	624.09M	652.10M	526.75M
Net Income	646.45M	480.15M	452.00M	419.39M	422.55M	334.81M
Balance Sheet
Total Assets	7.04B	7.54B	6.72B	6.55B	5.76B	5.69B
Cash, Cash Equivalents and Short-Term Investments	3.11B	3.45B	2.92B	2.85B	2.76B	2.82B
Total Debt	1.00B	1.41B	1.33B	1.35B	1.38B	1.71B
Total Liabilities	3.38B	4.02B	3.50B	3.61B	3.14B	3.43B
Stockholders Equity	3.65B	3.52B	3.22B	2.94B	2.62B	2.26B
Cash Flow
Free Cash Flow	0.00	624.00M	215.00M	163.80M	259.73M	22.05M
Operating Cash Flow	0.00	663.00M	232.00M	179.73M	284.30M	429.04M
Investing Cash Flow	0.00	-92.76M	-11.00M	-4.75M	-1.01M	-400.13M
Financing Cash Flow	0.00	-100.22M	-200.04M	-144.93M	-401.85M	-100.12M

Softmax Co., Ltd. (Japan) Technical Analysis

• Technical Analysis Sentiment: Neutral
• Last Price: 334.00
• 50DMA: Positive
• 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:3671, the sentiment is Neutral. The current price of 334 is below the 20-day moving average (MA) of 356.65, below the 50-day MA of 338.30, and above the 200-day MA of 309.85, indicating a neutral trend. The MACD of -0.90 indicates Positive momentum. The RSI at 45.72 is Neutral, neither overbought nor oversold. The STOCH value of 22.30 is Neutral, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Neutral sentiment for JP:3671.

Softmax Co., Ltd. (Japan) Peers Comparison

Name	Overall Rating	Market Cap	P/E Ratio	ROE	Dividend Yield	Revenue Growth	EPS Growth
4172	78 Outperform	¥5.34B	11.93	―	3.94%	13.85%	11.52%
6545	74 Outperform	¥3.73B	14.94	―	1.87%	6.68%	2.86%
9218	73 Outperform	¥8.33B	21.60	―	―	41.16%	2750.91%
3671	67 Neutral	¥8.20B	12.05	―	8.09%	32.95%	45.22%
Sector *	51 Neutral	$7.86B	-0.30	-43.30%	2.27%	22.53%	-2.21%
6034	45 Neutral	¥3.48B	-19.95	―	―	1.51%	-13.66%
3628	40 Underperform	¥6.52B	-2.42	―	―	-4.07%	-88.89%