Cave Interactive Co., Ltd. (3760) AI Stock Analysis

• Market Cap: ¥4.38B
• Dividend Yield: 1.44%
• Average Volume (3M): 26.20K
• Price to Earnings (P/E): ―
• Beta (1Y): 0.83
• Revenue Growth: 4.29%
• EPS Growth: -123.59%
• Country: JP
• Employees: 171
• Sector: Communication Services
• Sector Strength: 97
• Industry: Electronic Gaming & Multimedia
• EPS (TTM): N/A
• Shares Outstanding: 6,693,500
• 10 Day Avg. Volume: 43,080
• 30 Day Avg. Volume: 26,200
• PEG Ratio: -0.31
• Price to Book (P/B): 1.05
• Price to Sales (P/S): 0.47
• P/FCF Ratio: -25.35
• 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: 49 Neutral
• Price Target: ¥656.00 ▼(-10.63% Downside)

The overall stock score is primarily impacted by the company's strong revenue growth but is weighed down by profitability and cash flow challenges. Technical indicators suggest bearish momentum, and valuation metrics indicate potential overvaluation.

Positive Factors

Low leverage / strong capital structure

A manageable debt-to-equity ratio and strong equity ratio provide durable financial resilience. Low leverage reduces interest burden and bankruptcy risk, preserving capacity to invest in game development, fund DLC/updates, or withstand cyclical industry downturns without aggressive refinancing.

Historical revenue growth trajectory

Sustained revenue expansion over multiple periods indicates successful product launches and growing market adoption. That trend supports longer-term scale benefits, better negotiating power with distributors, and potential leverage of fixed R&D into higher incremental margins over time.

Niche IP and diversified monetization

A focused portfolio with recognizable shoot 'em up IP and diversified revenue streams (game sales, DLC, in‑game purchases, merchandise) supports recurring revenues and lifecycle extension. Strong niche positioning can sustain loyal customers and predictable content-driven monetization.

Negative Factors

Negative free cash flow

Persistent negative free cash flow and a falling FCF growth rate constrain the company's ability to self-fund development, marketing, or acquisitions. Over time this pressures liquidity, forces reliance on external financing, and limits strategic flexibility in a competitive games market.

Declining profitability margins

Worsening gross, EBIT, and net margins suggest rising costs or weaker pricing power. Margin deterioration undermines sustainable earnings generation, reduces cash conversion, and makes the business more sensitive to content success variability and higher production or marketing expenses.

Falling return on equity

A materially lower ROE signals declining efficiency in converting shareholder capital into profits. If persistent, this indicates suboptimal capital allocation or product profitability issues, which can erode shareholder value and limit the firm's ability to attract long-term equity investment.

Cave Interactive Co., Ltd. Business Overview & Revenue Model

Company Description

CAVE Interactive CO.,LTD. engages in entertainment business in Japan. It plans, produces, operates, and markets entertainment content, including mobile media. The company also offers games and live streaming services. CAVE Interactive CO.,LTD. was incorporated in 1994 and is based in Tokyo, Japan.

How the Company Makes Money

Cave Interactive Co., Ltd. generates revenue primarily through the sales of its video games, which include both physical copies and digital downloads. The company also earns income from in-game purchases and downloadable content (DLC) for its titles, enhancing user engagement and extending the lifecycle of their products. Additionally, Cave Interactive may engage in partnerships with other gaming companies for co-development projects or distribution agreements, contributing to its revenue. The company also explores merchandise related to its popular game franchises, further diversifying its income streams.

Cave Interactive Co., Ltd. Financial Statement Overview

Summary

Cave Interactive Co., Ltd. shows strong revenue growth but faces challenges in profitability and cash flow management. The balance sheet is stable with low leverage, but declining return on equity and negative free cash flow are concerns.

Income Statement

Cave Interactive Co., Ltd. has shown significant revenue growth over the years, particularly in the most recent periods, indicating a strong upward trajectory. However, the company's profitability margins, such as the net profit margin and EBIT margin, have been inconsistent, with recent declines. The gross profit margin has also decreased, suggesting potential cost management issues.

Balance Sheet

The company's balance sheet reflects a stable financial position with a manageable debt-to-equity ratio, indicating low leverage. However, the return on equity has decreased significantly, pointing to reduced efficiency in generating returns for shareholders. The equity ratio remains strong, suggesting a solid capital structure.

Cash Flow

Cash flow analysis reveals challenges, with negative free cash flow and a declining free cash flow growth rate. The operating cash flow to net income ratio is positive but relatively low, indicating potential issues in converting income into cash. The free cash flow to net income ratio is negative, highlighting cash flow management concerns.

Breakdown	TTM	Dec 2024	Dec 2023	Dec 2022	Dec 2021	Dec 2020
Income Statement
Total Revenue	13.62B	13.97B	12.27B	6.96B	1.41B	1.70B
Gross Profit	4.59B	5.23B	5.45B	3.44B	677.71M	793.74M
EBITDA	781.83M	55.80M	2.13B	2.97B	-901.39M	-234.60M
Net Income	-409.23M	246.49M	1.48B	2.58B	-936.99M	-244.97M
Balance Sheet
Total Assets	11.48B	13.25B	14.36B	13.49B	1.38B	1.42B
Cash, Cash Equivalents and Short-Term Investments	4.26B	6.20B	6.34B	6.39B	1.06B	904.44M
Total Debt	1.21B	1.25B	983.92M	1.10B	206.51M	209.72M
Total Liabilities	5.55B	6.98B	7.57B	8.40B	361.06M	359.27M
Stockholders Equity	5.92B	6.22B	6.09B	4.42B	997.56M	1.03B
Cash Flow
Free Cash Flow	0.00	-257.72M	-916.03M	1.68B	-520.33M	-485.48M
Operating Cash Flow	0.00	922.45M	569.09M	2.54B	-480.60M	-299.32M
Investing Cash Flow	0.00	-1.35B	-703.00M	1.28B	44.29M	-186.16M
Financing Cash Flow	0.00	279.65M	31.00M	1.85B	583.50M	287.31M

Cave Interactive Co., Ltd. Technical Analysis

• Technical Analysis Sentiment: Negative
• Last Price: 734.00
• 50DMA: Negative
• 100DMA: Negative
• 200DMA: Negative
• MACD: Positive
• RSI: Neutral
• STOCH: Positive

Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For JP:3760, the sentiment is Negative. The current price of 734 is above the 20-day moving average (MA) of 693.00, above the 50-day MA of 713.18, and below the 200-day MA of 886.33, indicating a bearish trend. The MACD of -16.41 indicates Positive momentum. The RSI at 31.23 is Neutral, neither overbought nor oversold. The STOCH value of 8.89 is Positive, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Negative sentiment for JP:3760.

Cave Interactive Co., Ltd. Peers Comparison

Name	Overall Rating	Market Cap	P/E Ratio	ROE	Dividend Yield	Revenue Growth	EPS Growth
3904	75 Outperform	¥8.52B	10.88	―	0.75%	12.70%	2207.66%
Sector *	60 Neutral	$48.67B	4.58	-11.27%	4.14%	2.83%	-41.78%
3932	60 Neutral	¥36.36B	17.40	―	4.06%	-15.30%	39.61%
3656	56 Neutral	¥24.00B	-3.18	―	―	-14.71%	-38.87%
3851	51 Neutral	¥4.15B	-19.42	―	0.64%	-13.35%	-258.79%
3760	49 Neutral	¥4.38B	-1.23	―	1.44%	4.29%	-123.59%
3911	48 Neutral	¥10.28B	5.79	―	―	11.15%	―