System D Inc. (3804) AI Stock Analysis

• Market Cap: ¥10.08B
• Dividend Yield: 1.51%
• Average Volume (3M): 1.83K
• Price to Earnings (P/E): 25.6
• Beta (1Y): 0.14
• Revenue Growth: 8.65%
• EPS Growth: 12.86%
• Country: JP
• Employees: 280
• Sector: Technology
• Sector Strength: 88
• Industry: Software - Application
• EPS (TTM): 16.58
• Shares Outstanding: 6,498,000
• 10 Day Avg. Volume: 1,050
• 30 Day Avg. Volume: 1,833
• PEG Ratio: 1.55
• Price to Book (P/B): 2.50
• Price to Sales (P/S): 2.49
• P/FCF Ratio: 11.72
• 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: 65 Neutral
• Price Target: ¥1,614.00 ▼(-15.28% Downside)
• Action: Reiterated Date: 03/18/26
• Date: Action: Reiterated 03/18/26

The score is primarily supported by solid financial stability (low leverage, solid equity position) and decent operating efficiency, while a clearly bearish technical setup (below major moving averages and negative MACD) is the main drag. Valuation is reasonable with a modest dividend yield, but not compelling enough to offset growth and momentum concerns.

Positive Factors

Low Leverage / Strong Capital Structure

Very low and improving leverage provides durable financial flexibility. A debt-to-equity near 0.04 and solid equity mix reduce refinancing and solvency risk, enabling multi-quarter support for R&D, product development, or opportunistic M&A without stressing cash flows.

High and Stable Gross & EBITDA Margins

Sustained ~43% gross margin and healthy operating margins indicate structural cost advantages or pricing power. These margins provide a persistent profitability cushion that supports cash generation and resilience to revenue pressure over several quarters.

Efficient Cash Generation

Operating cash flow that generally covers earnings and a FCF/Net Income ratio near 1 show the business reliably converts profit into cash. This strengthens the firm’s ability to fund capex, dividends, and strategic initiatives over the medium term.

Negative Factors

Recent Revenue Weakness

A recent decline in revenue signals weakening demand or customer churn that can persist if structural issues exist. Prolonged top-line contraction limits scale economics, reduces reinvestment capacity, and pressures long-term growth prospects unless reversed.

Declining Net Margin

A falling net margin, even if modest, erodes retained earnings and return on sales. Over multiple quarters it reduces the company’s ability to self-fund growth or sustain payouts and may indicate rising costs or pricing pressure that could be structural.

Volatile Free Cash Flow & Softer OCF

Variability in FCF and a recent drop in operating cash flow increase uncertainty around capital allocation. This volatility hampers predictable investment, dividend policy, and strategic planning, raising execution risk across a 2-6 month horizon.

System D Inc. Business Overview & Revenue Model

Company Description

System D Inc. (3804) is a technology company specializing in innovative software solutions and digital services. Focused on the telecommunications and information technology sectors, the company develops a range of products that enhance network efficiency and optimize data management. Its core offerings include cloud-based platforms, cybersecurity solutions, and enterprise resource planning (ERP) systems designed to meet the needs of various industries, from small businesses to large corporations.

System D Inc. Financial Statement Overview

Summary

Strong balance sheet with very low and improving leverage (debt-to-equity down to 0.038) and healthy operating margins support stability, but recent negative revenue growth, slightly declining net margin, and volatile/free-cash-flow softness temper the outlook.

Income Statement

System D Inc. shows a stable gross profit margin around 43%, indicating consistent cost management. However, the net profit margin has slightly declined from 2023 to 2025, reflecting potential challenges in maintaining profitability. Revenue growth has been negative in recent years, which could be a concern for future expansion. Despite these challenges, EBIT and EBITDA margins remain healthy, suggesting operational efficiency.

Balance Sheet

The company maintains a strong balance sheet with a low debt-to-equity ratio, decreasing from 0.156 in 2022 to 0.038 in 2025, indicating prudent financial management. Return on equity is stable, reflecting effective use of shareholder funds. The equity ratio is solid, suggesting a strong capital structure with a high proportion of equity financing.

Cash Flow

Operating cash flow remains robust, though it has decreased from 2024 to 2025. Free cash flow to net income ratio is nearly 1, indicating efficient cash generation relative to net income. However, free cash flow growth has been volatile, with significant fluctuations over the years, which could pose risks to cash availability for investments.

Breakdown	Oct 2025	Oct 2024	Oct 2023	Oct 2022	Oct 2021
Income Statement
Total Revenue	5.03B	4.63B	4.74B	4.23B	3.84B
Gross Profit	2.18B	2.00B	2.07B	1.95B	1.82B
EBITDA	1.45B	1.36B	1.39B	1.38B	1.21B
Net Income	627.89M	555.95M	632.70M	591.58M	573.60M
Balance Sheet
Total Assets	7.37B	6.96B	6.25B	5.90B	4.70B
Cash, Cash Equivalents and Short-Term Investments	2.50B	2.03B	1.19B	1.23B	1.14B
Total Debt	193.37M	313.36M	433.35M	561.71M	40.26M
Total Liabilities	2.36B	2.46B	2.15B	2.32B	1.60B
Stockholders Equity	5.01B	4.51B	4.09B	3.58B	3.10B
Cash Flow
Free Cash Flow	1.07B	1.49B	702.51M	68.53M	842.93M
Operating Cash Flow	1.08B	1.50B	900.33M	1.17B	868.04M
Investing Cash Flow	-741.00M	-398.54M	-682.47M	-1.49B	-478.04M
Financing Cash Flow	-261.67M	-266.74M	-255.83M	406.51M	-342.14M

System D Inc. Technical Analysis

• Technical Analysis Sentiment: Neutral
• Last Price: 1905.00
• 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:3804, the sentiment is Neutral. The current price of 1905 is above the 20-day moving average (MA) of 1544.20, above the 50-day MA of 1620.78, and below the 200-day MA of 1921.73, indicating a neutral trend. The MACD of -19.21 indicates Negative momentum. The RSI at 50.60 is Neutral, neither overbought nor oversold. The STOCH value of 47.04 is Neutral, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Neutral sentiment for JP:3804.

System D Inc. Peers Comparison

Name	Overall Rating	Market Cap	P/E Ratio	ROE	Dividend Yield	Revenue Growth	EPS Growth
4333	81 Outperform	¥22.54B	19.31	―	3.86%	0.50%	17.15%
3771	77 Outperform	¥28.82B	12.67	―	2.93%	11.53%	23.23%
3804	65 Neutral	¥10.08B	25.64	―	1.51%	8.65%	12.86%
3826	64 Neutral	¥4.98B	9.17	―	2.28%	―	―
Sector *	61 Neutral	$37.18B	12.37	-10.20%	1.83%	8.50%	-7.62%
2321	55 Neutral	¥16.47B	-39.56	―	―	-6.35%	71.66%
7527	47 Neutral	¥4.58B	-18.61	―	―	-40.57%	83.14%