DIGITAL HEARTS HOLDINGS Co., Ltd. (3676) AI Stock Analysis

• Market Cap: ¥20.64B
• Dividend Yield: 2.15%
• Average Volume (3M): 70.92K
• Price to Earnings (P/E): 24.1
• Beta (1Y): 0.79
• Revenue Growth: -0.09%
• EPS Growth: 1653.62%
• Country: JP
• Employees: 1,870
• Sector: Technology
• Sector Strength: 84
• Industry: Information Technology Services
• EPS (TTM): 20.82
• Shares Outstanding: 23,890,800
• 10 Day Avg. Volume: 54,120
• 30 Day Avg. Volume: 70,923
• 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: ¥1,074.00
• Price Target Upside: 10.84% Upside
• Rating Consensus: Moderate Buy
• Number of Analyst Covering: 1

• Rating: 72 Outperform
• Price Target: ¥1,074.00 ▲(10.84% Upside)

DIGITAL HEARTS HOLDINGS Co., Ltd. scores well due to its strong financial performance, characterized by robust revenue growth and effective cash flow management. However, the technical analysis presents mixed signals with some bearish momentum, and the valuation suggests the stock may be slightly overvalued. The absence of earnings call data and corporate events means these factors do not influence the score.

DIGITAL HEARTS HOLDINGS Co., Ltd. Business Overview & Revenue Model

Company Description

DIGITAL HEARTS HOLDINGS Co., Ltd. is a Japanese company specializing in quality assurance services for digital content, primarily in the gaming and entertainment sectors. The company offers a range of services including debugging, testing, and localization to ensure that digital products meet quality standards and are tailored for international markets. It operates across various regions, serving both domestic and international clients.

How the Company Makes Money

The company generates revenue primarily through providing quality assurance services, including debugging and testing for video games and other digital content. DIGITAL HEARTS HOLDINGS Co., Ltd. charges clients for its testing and debugging services, which are essential for ensuring the quality and functionality of digital products before they reach the market. Additionally, the company offers localization services, helping clients adapt their products for different languages and cultural contexts, further expanding their market reach. Partnerships with major gaming companies and continuous demand for high-quality digital content are significant factors contributing to the company's earnings.

DIGITAL HEARTS HOLDINGS Co., Ltd. Financial Statement Overview

Summary

DIGITAL HEARTS HOLDINGS Co., Ltd. exhibits strong financial performance with consistent revenue growth and improving profitability margins. The company maintains a stable financial position with effective cash flow management, although the significant debt level requires careful management.

Income Statement

DIGITAL HEARTS HOLDINGS Co., Ltd. has demonstrated robust revenue growth, with a revenue increase from ¥21.1 billion in 2020 to ¥39.7 billion in 2025. The gross profit margin remains healthy at around 25.5% in 2025, indicating efficient cost management. Net profit margin improved significantly, reaching 1.6% in 2025 from a low of 0.5% in 2024, showcasing enhanced profitability. EBIT and EBITDA margins have also shown positive trends, suggesting strong operational performance.

Balance Sheet

The company maintains a strong equity base with a debt-to-equity ratio of 0.58 in 2025, reflecting a balanced capital structure. ROE improved to 7.03% in 2025, demonstrating effective use of equity capital. The equity ratio stands at 44.9%, indicating a solid financial position with a substantial portion of assets financed by equity, reducing financial risk. However, the total debt level remains significant, which could pose potential risks if not managed carefully.

Cash Flow

The operating cash flow to net income ratio is robust, indicating strong cash generation relative to net income. Free cash flow has grown steadily, with a significant increase in free cash flow from ¥829 million in 2020 to ¥2.69 billion in 2025. The free cash flow to net income ratio is favorable, suggesting efficient conversion of profits to cash flows. Overall, the company's cash flow management appears effective, supporting its operational and strategic needs.

Breakdown	TTM	Dec 2024	Dec 2023	Dec 2022	Dec 2021	Dec 2020
Income Statement
Total Revenue	39.75B	39.75B	38.79B	36.52B	29.18B	22.67B
Gross Profit	10.14B	10.14B	10.09B	10.63B	8.39B	6.43B
EBITDA	3.42B	2.70B	1.91B	3.18B	3.49B	1.92B
Net Income	629.37M	629.46M	176.93M	799.55M	1.78B	974.49M
Balance Sheet
Total Assets	19.95B	19.95B	21.10B	19.58B	17.57B	14.34B
Cash, Cash Equivalents and Short-Term Investments	7.59B	7.59B	6.90B	6.50B	5.24B	5.23B
Total Debt	5.20B	5.20B	7.10B	5.11B	5.59B	4.80B
Total Liabilities	10.69B	10.69B	12.25B	10.11B	9.99B	8.02B
Stockholders Equity	8.95B	8.95B	8.42B	8.81B	7.00B	5.70B
Cash Flow
Free Cash Flow	0.00	2.69B	946.83M	1.82B	2.70B	1.10B
Operating Cash Flow	0.00	3.12B	1.76B	2.85B	3.08B	1.42B
Investing Cash Flow	0.00	-147.41M	-2.37B	-1.90B	-2.54B	-1.81B
Financing Cash Flow	0.00	-2.41B	934.08M	141.47M	-546.57M	1.73B

DIGITAL HEARTS HOLDINGS Co., Ltd. Technical Analysis

• Technical Analysis Sentiment: Negative
• Last Price: 969.00
• 50DMA: Negative
• 100DMA: Positive
• 200DMA: Positive
• MACD: Positive
• RSI: Neutral
• STOCH: Positive

Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For JP:3676, the sentiment is Negative. The current price of 969 is below the 20-day moving average (MA) of 972.70, above the 50-day MA of 964.36, and above the 200-day MA of 927.22, indicating a neutral trend. The MACD of 0.43 indicates Positive momentum. The RSI at 45.49 is Neutral, neither overbought nor oversold. The STOCH value of 9.09 is Positive, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Negative sentiment for JP:3676.

DIGITAL HEARTS HOLDINGS Co., Ltd. Peers Comparison

Name	Overall Rating	Market Cap	P/E Ratio	ROE	Dividend Yield	Revenue Growth	EPS Growth
6199	80 Outperform	¥23.30B	13.24		0.78%	11.33%	24.80%
2185	78 Outperform	¥23.11B	10.78		1.38%	-1.95%	34.62%
3788	73 Outperform	¥25.11B	32.94		1.67%	5.38%	-8.86%
6572	73 Outperform	¥25.33B	44.43		1.39%	13.86%	―
3676	72 Outperform	¥20.64B	24.12		2.15%	-0.09%	1653.62%
Sector *	61 Neutral	$35.83B	9.00	-10.39%	1.87%	8.46%	-7.85%
3657	54 Neutral	¥13.26B	―		4.26%	10.47%	63.47%

DIGITAL HEARTS HOLDINGS Co., Ltd. Corporate Events

DIGITAL HEARTS HOLDINGS Reports Strong Profit Growth Amid Decline in Sales

DIGITAL HEARTS HOLDINGS Co., Ltd. reported its consolidated financial results for the first quarter ending June 30, 2025, showing a slight decline in net sales by 4.6% compared to the previous year. However, the company experienced significant growth in operating income, ordinary income, and profit attributable to owners of the parent, with increases of 139.2%, 124.0%, and 119.0% respectively. This improvement in profitability suggests a strong operational performance despite the decrease in sales, potentially strengthening the company’s position in the market.