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

• Market Cap: ¥19.88B
• Dividend Yield: 2.36%
• Average Volume (3M): 70.74K
• Price to Earnings (P/E): 22.0
• Beta (1Y): 0.87
• Revenue Growth: -2.68%
• EPS Growth: -12.83%
• Country: JP
• Employees: 1,870
• Sector: Technology
• Sector Strength: 88
• Industry: Information Technology Services
• EPS (TTM): 13.17
• Shares Outstanding: 23,890,800
• 10 Day Avg. Volume: 80,220
• 30 Day Avg. Volume: 70,740
• PEG Ratio: 0.14
• Price to Book (P/B): 2.44
• Price to Sales (P/S): 0.55
• P/FCF Ratio: 8.11
• 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: Moderate Buy
• Number of Analyst Covering: 0
• EPS Forecast (FY): N/A
• Revenue Forecast (FY): N/A

• Rating: 73 Outperform
• Price Target: ¥1,070.00 ▲(14.68% Upside)

DIGITAL HEARTS HOLDINGS Co., Ltd. has a strong financial foundation with consistent revenue growth and effective cash flow management, which are the most significant factors driving the score. The technical analysis presents a mixed outlook, with neutral momentum indicators. The valuation is reasonable, with a moderate P/E ratio and a decent dividend yield. The absence of earnings call and corporate events data has no impact on the overall score.

Positive Factors

Revenue Growth

The significant revenue growth over five years indicates strong market demand and effective business strategies, supporting long-term expansion.

Cash Flow Management

Robust cash flow growth highlights the company's ability to efficiently convert profits into cash, ensuring operational and strategic flexibility.

Profitability Margins

Improving profit margins reflect enhanced cost management and operational efficiency, contributing to sustainable financial health.

Negative Factors

Rising Debt Levels

High debt levels could strain financial resources and limit future investment opportunities, posing a risk if not managed effectively.

Revenue Growth Decline

A negative revenue growth rate indicates potential challenges in maintaining sales momentum, which could impact future earnings stability.

Equity Ratio Concerns

While the equity ratio is solid, the presence of significant debt could increase financial risk, affecting long-term stability if not addressed.

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

Company Description

DIGITAL HEARTS HOLDINGS Co., Ltd., together with its subsidiaries, engages in debugging, media, and other businesses. It provides debug testing and reporting services for consumer games, mobile and online games, arcade games, etc.; one-stop solutions, such as translation, LQA, and marketing support for game makers to develop overseas markets; and support services in the creating of content, including game development and CG video creation, etc. The company also operates 4Gamer.net, a website for distributing information about computer games and online games, and hardware; and publishes news, as well as distributes movies, free trials, weekly publications, and other content. In addition, it offers testing services for IT-related software, including websites and operations systems; solutions for the development of AI application and testing automation; and security services. Further, the company provides various IT services, such as system development, maintenance, and operation support for IT systems. The company was formerly known as Hearts United Group Co., Ltd. and changed its name to DIGITAL HEARTS HOLDINGS Co., Ltd. in July 2018. DIGITAL HEARTS HOLDINGS Co., Ltd. was founded in 2001 and is headquartered in Tokyo, Japan.

How the Company Makes Money

DIGITAL HEARTS generates revenue through multiple channels, with key streams including the sale of mobile games and in-app purchases, software development contracts, and quality assurance services for other developers. The company partners with various gaming companies and content creators to enhance their offerings, thereby securing contracts that provide consistent income. Additionally, they may earn revenue through licensing agreements and collaborations with other firms in the digital content space, leveraging their expertise in testing and consulting to assist clients in optimizing their products for market success.

DIGITAL HEARTS HOLDINGS Co., Ltd. Financial Statement Overview

Summary

DIGITAL HEARTS HOLDINGS Co., Ltd. exhibits strong financial performance with consistent revenue growth, improving profitability margins, and a stable financial position. The company demonstrates sound cash flow generation, supporting its operations and growth strategies. While there is notable debt on the balance sheet, the company's equity ratio and cash flow capabilities mitigate potential risks.

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	39.29B	39.75B	38.79B	36.52B	29.18B	22.67B
Gross Profit	10.32B	10.14B	10.09B	10.63B	8.39B	6.43B
EBITDA	3.08B	2.70B	1.91B	3.18B	3.49B	1.92B
Net Income	881.41M	629.46M	176.93M	799.55M	1.78B	974.49M
Balance Sheet
Total Assets	19.71B	19.95B	21.10B	19.58B	17.57B	14.34B
Cash, Cash Equivalents and Short-Term Investments	7.22B	7.59B	6.90B	6.50B	5.24B	5.23B
Total Debt	5.39B	5.20B	7.10B	5.11B	5.59B	4.80B
Total Liabilities	10.45B	10.69B	12.25B	10.11B	9.99B	8.02B
Stockholders Equity	8.97B	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: 933.00
• 50DMA: Negative
• 100DMA: Negative
• 200DMA: Negative
• MACD: Negative
• RSI: Neutral
• STOCH: Neutral

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 933 is below the 20-day moving average (MA) of 935.10, below the 50-day MA of 948.44, and below the 200-day MA of 952.12, indicating a bearish trend. The MACD of -5.62 indicates Negative momentum. The RSI at 40.39 is Neutral, neither overbought nor oversold. The STOCH value of 46.81 is Neutral, 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
2185	79 Outperform	¥22.61B	10.36	―	3.06%	-6.49%	4.98%
3788	76 Outperform	¥27.55B	26.69	―	1.50%	7.83%	49.73%
3676	73 Outperform	¥19.88B	21.98	―	2.36%	-2.68%	-12.83%
6199	73 Outperform	¥21.07B	12.11	―	0.85%	11.50%	11.20%
Sector *	61 Neutral	$37.18B	12.37	-10.20%	1.83%	8.50%	-7.62%
6572	56 Neutral	¥19.27B	41.99	―	1.75%	13.47%	296.94%
3657	50 Neutral	¥11.28B	-16.20	―	5.03%	3.97%	63.06%

DIGITAL HEARTS HOLDINGS Co., Ltd. Corporate Events

DIGITAL HEARTS Reports Extraordinary Loss on Investment Securities

DIGITAL HEARTS HOLDINGS Co., Ltd. announced an extraordinary loss of 299 million yen due to a significant decline in the market value of some investment securities. Despite this loss, the company’s consolidated operating income for the first half of the fiscal year is slightly above expectations, and there are no changes to the previously announced earnings forecast.

DIGITAL HEARTS Expands Global Reach with Acquisition of HUWIZ SOLUTIONS

DIGITAL HEARTS HOLDINGS Co., Ltd. has announced the acquisition of HUWIZ SOLUTIONS INC., a Canadian company specializing in QA for game software, to make it a consolidated subsidiary. This strategic move aims to expand DIGITAL HEARTS’ English-language QA capacity and strengthen its customer base in North America and Europe. The acquisition is expected to create synergies by sharing QA know-how and resources, accelerating global expansion, and setting a new benchmark for quality assurance in the gaming industry.

DIGITAL HEARTS HOLDINGS Reports Strong Income Growth Amid Sales Decline

DIGITAL HEARTS HOLDINGS Co., Ltd. reported a decline in net sales by 4% for the first half of 2025 compared to the previous year, but saw significant growth in operating and ordinary income by 74.2% and 75.7%, respectively. The company’s financial position remains stable with a slight increase in total assets and net assets, and a maintained dividend forecast, indicating a strong operational performance despite the sales dip.

DIGITAL HEARTS HOLDINGS Announces Capital Reduction for Subsidiary AGEST

DIGITAL HEARTS HOLDINGS Co., Ltd. has announced a planned reduction in the stated capital of its subsidiary, AGEST, Inc., from 100 million yen to 10 million yen. This move is aimed at enhancing financial flexibility and is part of the company’s broader financial and tax strategies. The capital reduction will not affect the number of shares or net assets of AGEST and is expected to have no impact on the consolidated business results of DIGITAL HEARTS HOLDINGS.