System Research Co., Ltd. (3771) AI Stock Analysis

• Market Cap: ¥31.38B
• Dividend Yield: 2.93%
• Average Volume (3M): 65.13K
• Price to Earnings (P/E): 12.8
• Beta (1Y): 0.87
• Revenue Growth: 11.53%
• EPS Growth: 23.23%
• Country: JP
• Employees: 1,442
• Sector: Technology
• Sector Strength: 88
• Industry: Software - Application
• EPS (TTM): 40.04
• Shares Outstanding: 16,720,000
• 10 Day Avg. Volume: 28,730
• 30 Day Avg. Volume: 65,130
• PEG Ratio: 0.96
• Price to Book (P/B): 2.19
• Price to Sales (P/S): 1.00
• P/FCF Ratio: 26.66
• 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: 77 Outperform
• Price Target: ¥2,086.00 ▲(2.81% Upside)
• Action: Reiterated Date: 10/30/25
• Date: Action: Reiterated 10/30/25

System Research Co., Ltd. scores well due to its strong financial performance and reasonable valuation. The technical analysis suggests some short-term caution but indicates longer-term strength. The absence of earnings call data and corporate events does not impact the overall score significantly.

Positive Factors

Balance Sheet Strength

System Research's conservative leverage and high equity ratio provide durable financial resilience, lowering refinancing and liquidity risk. A strong ROE indicates efficient equity use, supporting capacity to fund projects, weather downturns, and invest in strategic initiatives without excessive debt.

Revenue Growth & Margins

Consistent double-digit top-line growth paired with healthy gross and net margins signals sustainable core profitability. Stable EBIT/EBITDA margins reflect repeatable operational efficiency in project delivery and services, supporting long-term cash generation and reinvestment capacity.

Recurring & Diversified Services

A business mix of system integration projects plus recurring operation/maintenance and infrastructure work creates a diversified revenue base. Recurring service fees reduce volatility from one-off projects and enable cross-selling, improving long-term revenue predictability and client retention.

Negative Factors

Declining Free Cash Flow

A substantial FCF decline points to weaker cash generation versus prior periods. Persistently lower free cash flow can constrain capital allocation, reduce buffer for cyclical downturns, and limit ability to fund growth initiatives or increase shareholder returns without tapping liquidity or debt.

Moderate Cash Conversion

Operating cash converts to reported earnings at less than a one-to-one rate for free cash flow. The gap between net income and FCF suggests working capital or capex demands; if persistent, this reduces earnings quality and may pressure funding for reinvestment or dividends over the medium term.

Project-driven Revenue Volatility

Heavy reliance on project-based system integration exposes revenues and margins to timing of client IT budgets and contract cycles. Combined with a sizable employee base, fixed-cost leverage can amplify margin swings when project demand softens, challenging consistent earnings stability.

System Research Co., Ltd. Business Overview & Revenue Model

Company Description

System Research Co.,Ltd. offers software development services in Japan. It also provides outsourcing and web related services. System Research Co.,Ltd. was founded in 1981 and is headquartered in Nagoya, Japan.

How the Company Makes Money

System Research Co., Ltd. generates revenue primarily through its software solutions and IT services. The company earns money by charging clients for system integration projects, custom software development, and ongoing IT support and consulting services. Key revenue streams include project-based contracts, long-term service agreements, and maintenance fees for software products. Additionally, the company may engage in partnerships with other firms to enhance its service offerings, thereby expanding its customer base and increasing its earnings potential. These strategic alliances can lead to joint ventures, co-development of technologies, and access to new markets, further contributing to the company's financial growth.

System Research Co., Ltd. Financial Statement Overview

Summary

System Research Co., Ltd. demonstrates strong financial health with robust revenue growth and profitability metrics. The balance sheet is solid with low leverage and strong equity backing. However, there is room for improvement in cash flow generation, which slightly tempers the overall financial performance score.

Income Statement

System Research Co., Ltd. has demonstrated strong revenue growth, with a notable increase from ¥23,320 million to ¥25,931 million, a growth rate of approximately 11.2%. Gross profit margin stands at 23.2%, indicating efficient cost management. Net profit margin improved to 8.5%, reflecting enhanced profitability. Both EBIT margin and EBITDA margin are solid, at 11.6% and 12.7% respectively, showcasing robust operational efficiency.

Balance Sheet

The company maintains a strong balance sheet with a low debt-to-equity ratio of 0.11, indicating conservative leverage. Return on Equity (ROE) is healthy at 18.6%, suggesting efficient use of equity to generate profits. The equity ratio is strong at 67.4%, highlighting a stable financial position with substantial equity backing its assets.

Cash Flow

System Research Co., Ltd. experienced a decline in free cash flow by approximately 35.3%, which may indicate increased capital expenditures or other cash outflows. However, the operating cash flow to net income ratio is robust at 0.94, reflecting efficient cash conversion from earnings. The free cash flow to net income ratio is moderate at 0.44, suggesting room for improvement in cash flow generation relative to net income.

Breakdown	TTM	Mar 2025	Mar 2024	Mar 2023	Mar 2022	Mar 2021
Income Statement
Total Revenue	26.68B	25.93B	23.32B	21.56B	18.41B	16.16B
Gross Profit	6.21B	6.03B	5.36B	4.82B	4.12B	3.47B
EBITDA	3.35B	3.29B	2.86B	2.32B	2.24B	1.72B
Net Income	2.28B	2.19B	1.97B	1.60B	1.49B	1.09B
Balance Sheet
Total Assets	16.02B	17.53B	16.15B	14.18B	12.88B	11.20B
Cash, Cash Equivalents and Short-Term Investments	7.08B	8.20B	8.33B	7.37B	6.35B	5.84B
Total Debt	1.36B	1.30B	1.44B	1.40B	1.40B	1.43B
Total Liabilities	4.74B	5.70B	5.63B	5.05B	4.75B	4.05B
Stockholders Equity	11.26B	11.81B	10.51B	9.12B	8.12B	7.14B
Cash Flow
Free Cash Flow	0.00	971.47M	1.50B	1.51B	1.23B	942.47M
Operating Cash Flow	0.00	2.06B	2.46B	1.80B	1.29B	1.09B
Investing Cash Flow	0.00	-1.14B	-926.71M	-273.30M	-254.65M	-144.11M
Financing Cash Flow	0.00	-1.04B	-546.50M	-501.65M	-526.75M	-466.15M

System Research Co., Ltd. Technical Analysis

• Technical Analysis Sentiment: Negative
• Last Price: 2029.00
• 50DMA: Negative
• 100DMA: Negative
• 200DMA: Negative
• MACD: Positive
• RSI: Neutral
• STOCH: Neutral

Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For JP:3771, the sentiment is Negative. The current price of 2029 is above the 20-day moving average (MA) of 1862.20, above the 50-day MA of 1951.72, and above the 200-day MA of 1984.58, indicating a bearish trend. The MACD of -46.50 indicates Positive momentum. The RSI at 43.44 is Neutral, neither overbought nor oversold. The STOCH value of 34.77 is Neutral, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Negative sentiment for JP:3771.

System Research Co., Ltd. Peers Comparison

Name	Overall Rating	Market Cap	P/E Ratio	ROE	Dividend Yield	Revenue Growth	EPS Growth
4333	81 Outperform	¥21.97B	16.24	―	3.86%	0.50%	17.15%
3771	77 Outperform	¥31.38B	12.82	―	2.93%	11.53%	23.23%
4323	72 Outperform	¥51.78B	18.53	―	1.50%	13.48%	35.63%
3826	70 Outperform	¥5.64B	7.44	―	2.28%	―	―
9629	68 Neutral	¥37.21B	25.92	―	4.58%	4.58%	-15.00%
Sector *	61 Neutral	$37.18B	12.37	-10.20%	1.83%	8.50%	-7.62%
7527	47 Neutral	¥5.17B	-12.18	―	―	-40.57%	83.14%

System Research Co., Ltd. Corporate Events

System Research Raises FY2026 Dividend Forecast by ¥10 Per Share

System Research Co., Ltd. has revised its dividend forecast for the fiscal year ending March 31, 2026, raising its planned annual dividend from ¥60 to ¥70 per share. In line with its basic policy of shareholder returns and a target dividend payout ratio of 40%, the company’s board decided to increase the year-end dividend by ¥10 per share compared with its previous forecast, signaling confidence in its earnings performance and future outlook and offering higher cash returns to shareholders than in the prior fiscal year.

The most recent analyst rating on (JP:3771) stock is a Buy with a Yen2292.00 price target. To see the full list of analyst forecasts on System Research Co., Ltd. stock, see the JP:3771 Stock Forecast page.

System Research Posts Double-Digit Profit Growth and Hikes Dividend Forecast

System Research Co., Ltd. reported solid growth for the nine months ended December 31, 2025, with net sales rising 11.4% year on year to ¥21.42 billion and profit attributable to owners of parent increasing 14.8% to ¥1.785 billion, alongside an improvement in its equity ratio from 67.3% to 71.7%, signaling a stronger balance sheet. The company maintained its full-year forecast, projecting double-digit gains in sales and earnings for the fiscal year ending March 31, 2026, and revised its dividend outlook upward to a planned annual payout of ¥70 per share, underscoring management’s confidence in earnings momentum and enhancing returns to shareholders.

The most recent analyst rating on (JP:3771) stock is a Buy with a Yen2292.00 price target. To see the full list of analyst forecasts on System Research Co., Ltd. stock, see the JP:3771 Stock Forecast page.