Nippon Ichi Software, Inc. (3851) AI Stock Analysis

• Market Cap: ¥4.13B
• Dividend Yield: 0.61%
• Average Volume (3M): 3.62K
• Price to Earnings (P/E): ―
• Beta (1Y): 0.30
• Revenue Growth: -13.35%
• EPS Growth: -258.79%
• Country: JP
• Employees: 185
• Sector: Communication Services
• Sector Strength: 97
• Industry: Electronic Gaming & Multimedia
• EPS (TTM): -10.96
• Shares Outstanding: 5,151,100
• 10 Day Avg. Volume: 3,730
• 30 Day Avg. Volume: 3,623
• PEG Ratio: 0.21
• Price to Book (P/B): 0.52
• Price to Sales (P/S): 0.78
• P/FCF Ratio: 23.26
• 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: Hold
• Number of Analyst Covering: 0
• EPS Forecast (FY): N/A
• Revenue Forecast (FY): N/A

• Rating: 51 Neutral
• Price Target: ¥856.00 ▲(5.81% Upside)

Nippon Ichi Software, Inc. faces significant challenges in financial performance and valuation, with declining revenues and negative profitability impacting its P/E ratio. The technical analysis indicates weak momentum, further weighing on the stock's outlook. The company's strong balance sheet is a positive aspect, but operational improvements are necessary for future growth.

Positive Factors

Strong Balance Sheet

A strong balance sheet with low leverage and high equity ratios provides financial stability and flexibility for strategic investments.

Partnerships with Major Platforms

Partnerships with major platforms ensure wide distribution and promotion, enhancing market reach and supporting long-term revenue streams.

International Market Expansion

International expansion through subsidiaries allows for diversification of revenue sources and reduces reliance on domestic markets.

Negative Factors

Declining Revenue

Declining revenue indicates challenges in market demand or competition, which can impact long-term growth and profitability.

Negative Profitability

Negative profitability pressures cash flow and limits reinvestment capabilities, posing risks to sustainable growth and shareholder value.

Cash Flow Challenges

Challenges in cash flow conversion can hinder operational flexibility and the ability to fund new projects or manage debt effectively.

Nippon Ichi Software, Inc. Business Overview & Revenue Model

Company Description

Nippon Ichi Software, Inc. (3851) is a Japanese video game company known for its role-playing games (RPGs) and tactical games. Founded in 1993, the company has built a reputation for its unique storytelling and quirky characters, particularly through its flagship series, Disgaea. Nippon Ichi operates primarily in the gaming sector, producing both console and PC games, and has expanded into mobile gaming as well. The company also engages in the publishing of games developed by other studios, enhancing its portfolio and market presence.

How the Company Makes Money

Nippon Ichi Software generates revenue primarily through the sale of its video games, which includes both physical and digital copies. The company benefits from a loyal fanbase, particularly for its Disgaea series, which has seen multiple successful iterations and expansions. Additional revenue streams come from downloadable content (DLC), merchandise sales, and collaborations with other developers for publishing their games. The company also explores mobile gaming opportunities, tapping into the growing market for mobile applications. Strategic partnerships with console manufacturers and distribution platforms further support its earnings, allowing for a broader reach and increased sales potential.

Nippon Ichi Software, Inc. Financial Statement Overview

Summary

Nippon Ichi Software, Inc. shows a strong balance sheet with low leverage and high equity ratios. However, it faces challenges in income generation and cash conversion, with declining revenues, profitability, and cash flows. Stabilizing operations and enhancing profitability are crucial for future growth.

Income Statement

The income statement reveals a mixed performance. The company experienced a revenue decline of approximately 0.75% from 2024 to 2025, following a drop in gross profit margin. Net profit margin turned negative due to a significant net loss in 2025, indicating challenges in maintaining profitability. However, EBIT and EBITDA margins have seen volatility, signaling inconsistent operational efficiency.

Balance Sheet

The balance sheet remains robust with a strong equity base, as seen in the consistently high equity ratio. Despite a relatively low debt-to-equity ratio, indicating prudent leverage management, the company has experienced a decline in stockholders' equity. Return on equity has also turned negative due to recent losses, suggesting pressure on shareholder value creation.

Cash Flow

Cash flow analysis shows a decline in operating and free cash flow from 2024 to 2025, with negative free cash flow growth. Although the company maintains a positive operating cash flow to net income ratio, the free cash flow to net income ratio is negative, reflecting difficulties in converting income to free cash flow.

Breakdown	TTM	Dec 2024	Dec 2023	Dec 2022	Dec 2021	Dec 2020
Income Statement
Total Revenue	4.77B	5.30B	5.34B	4.83B	5.72B	5.30B
Gross Profit	1.91B	1.95B	2.58B	2.74B	3.33B	2.89B
EBITDA	-22.43M	49.05M	950.30M	1.05B	1.78B	1.31B
Net Income	-233.19M	-157.22M	593.40M	672.48M	1.27B	905.32M
Balance Sheet
Total Assets	10.81B	11.15B	10.82B	9.38B	8.23B	6.39B
Cash, Cash Equivalents and Short-Term Investments	5.58B	5.94B	5.36B	4.35B	4.77B	3.78B
Total Debt	1.76B	1.84B	1.17B	1.06B	769.67M	367.10M
Total Liabilities	3.28B	3.29B	2.73B	2.43B	2.09B	1.75B
Stockholders Equity	7.53B	7.87B	8.08B	6.95B	6.14B	4.64B
Cash Flow
Free Cash Flow	0.00	177.03M	358.53M	-188.74M	606.70M	1.42B
Operating Cash Flow	0.00	404.15M	794.38M	50.42M	1.19B	1.55B
Investing Cash Flow	0.00	-225.98M	-1.04B	-1.02B	-820.70M	552.41M
Financing Cash Flow	0.00	471.21M	78.71M	269.02M	343.30M	-83.00M

Nippon Ichi Software, Inc. Technical Analysis

• Technical Analysis Sentiment: Negative
• Last Price: 809.00
• 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:3851, the sentiment is Negative. The current price of 809 is below the 20-day moving average (MA) of 812.35, below the 50-day MA of 833.48, and below the 200-day MA of 831.47, indicating a bearish trend. The MACD of -8.73 indicates Negative momentum. The RSI at 45.32 is Neutral, neither overbought nor oversold. The STOCH value of 63.99 is Neutral, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Negative sentiment for JP:3851.

Nippon Ichi Software, Inc. Peers Comparison

Name	Overall Rating	Market Cap	P/E Ratio	ROE	Dividend Yield	Revenue Growth	EPS Growth
3723	68 Neutral	¥15.20B	23.09	―	1.33%	3.50%	6.04%
Sector *	60 Neutral	$48.67B	4.58	-11.27%	4.14%	2.83%	-41.78%
3907	58 Neutral	¥2.44B	7.78	―	―	2.33%	―
3851	51 Neutral	¥4.13B	-17.78	―	0.61%	-13.35%	-258.79%
3810	48 Neutral	¥9.73B	-4.23	―	―	-15.04%	25.50%
3911	48 Neutral	¥10.23B	5.66	―	―	11.15%	―
3758	46 Neutral	¥6.10B	-32.85	―	1.69%	-22.98%	83.75%