Segue Group Co., Ltd. (3968) AI Stock Analysis

• Market Cap: ¥19.92B
• Dividend Yield: 1.72%
• Average Volume (3M): 150.76K
• Price to Earnings (P/E): 23.2
• Beta (1Y): 1.20
• Revenue Growth: 26.24%
• EPS Growth: 29.73%
• Country: JP
• Employees: 709
• Sector: Technology
• Sector Strength: 88
• Industry: Information Technology Services
• EPS (TTM): 17.20
• Shares Outstanding: 32,564,075
• 10 Day Avg. Volume: 268,970
• 30 Day Avg. Volume: 150,760
• PEG Ratio: -2.04
• Price to Book (P/B): 6.78
• Price to Sales (P/S): 1.10
• P/FCF Ratio: 12.95
• 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: 78 Outperform
• Price Target: ¥724.00 ▲(10.20% Upside)

Segue Group Co., Ltd. benefits from strong financial performance and technical indicators, driving a positive outlook. However, the high valuation suggests caution. The absence of earnings call and corporate events data means these factors do not influence the score.

Positive Factors

Sustained Revenue Growth

Multi-year revenue expansion demonstrates durable market demand and successful client acquisition in software, consulting, and maintenance. Sustained top-line growth supports scalable operations, economies of scale, and provides recurring income that underpins reinvestment and strategic initiatives over the medium term.

Improved Cash Generation

A structural shift to positive operating cash flow indicates materially better cash conversion and working-capital management. Stronger cash generation reduces reliance on external funding, enhances liquidity to fund R&D or contracts, and improves resilience against cyclical slowdowns over the coming months.

Healthy Gross Margins

Consistently healthy gross margins above 20% point to sustainable cost control or pricing power in core software and services. This margin buffer supports ongoing investment in product and consulting capabilities and helps protect operating profitability from moderate revenue variability over an intermediate horizon.

Negative Factors

Declining Net Profitability

A marked fall in net margin over several years signals rising operating costs, margin compression, or weaker pricing power that reduce bottom-line conversion. Persistently lower net margins limit retained earnings, constrain reinvestment capacity, and can impair long-term shareholder returns if not reversed.

Rising Leverage

An increased debt-to-equity ratio raises financial risk and interest burden, reducing flexibility to pursue opportunities or absorb shocks. For a services-oriented firm with project timing variability, higher leverage can pressure cash flow during slower periods and limit the ability to fund strategic investments without raising additional capital.

Volatile Return on Equity

A sharp and volatile decline in ROE indicates inconsistent profitability and weaker returns on shareholder capital. This undermines long-term value creation, suggests potential inefficiencies in capital allocation or one-off impacts, and raises questions about management's ability to sustainably generate shareholder returns.

Segue Group Co., Ltd. Business Overview & Revenue Model

Company Description

Segue Group Co.,Ltd. provides design, construction, operation, and maintenance services related to IT infrastructure and network security products in Japan. It offers distribution; system integration; voice network, LAN environment, and BX environment construction; help desk support; human resources consulting; and training and educational services, as well as computer network equipment, peripheral equipment, and communication equipment maintenance services. Segue Group Co.,Ltd. was incorporated in 2014 and is headquartered in Tokyo, Japan.

How the Company Makes Money

Segue Group generates revenue through multiple streams, including software licensing fees, consulting services, and ongoing maintenance contracts. The company charges clients for the initial setup and customization of software solutions, which is often supplemented by recurring income from service agreements. Additionally, strategic partnerships with other tech firms and industry leaders allow Segue Group to expand its service offerings and reach new markets, further bolstering its revenue potential.

Segue Group Co., Ltd. Financial Statement Overview

Summary

Segue Group Co., Ltd. shows strong revenue growth and efficient operations, but profitability margins have faced pressure recently. The balance sheet reflects increased leverage, yet remains stable. Improved cash flow generation suggests robust cash management, though capital allocation could be optimized.

Income Statement

Segue Group Co., Ltd. has demonstrated strong revenue growth over the years, with a revenue increase from 10,992 million in 2020 to 18,717 million in 2024. Gross profit margin remains healthy, consistently above 20%, indicating effective cost management. However, the net profit margin has declined from 5.8% in 2020 to 2.7% in 2024, which may suggest increased cost pressures or lower pricing power. EBIT and EBITDA margins are stable, reflecting operational efficiency.

Balance Sheet

The company maintains a solid equity base, with an increasing equity ratio from 44.1% in 2019 to 22.3% in 2024, although it has decreased in recent years. The debt-to-equity ratio has risen to 0.76 in 2024, indicating increased leverage but still within a manageable range. Return on equity has shown variability, decreasing sharply in 2024, reflecting potential challenges in generating returns for shareholders.

Cash Flow

Operating cash flow has improved significantly, turning from negative in 2021 to positive in 2024, showcasing better cash management. Free cash flow has grown alongside operating cash flow, highlighting improved liquidity. However, the free cash flow to net income ratio is relatively high, which might indicate less efficient capital allocation.

Breakdown	TTM	Dec 2024	Dec 2023	Dec 2022	Dec 2021	Dec 2020
Income Statement
Total Revenue	20.31B	18.72B	17.44B	13.62B	12.04B	10.99B
Gross Profit	5.02B	4.59B	4.12B	3.56B	3.09B	3.09B
EBITDA	1.48B	1.46B	1.23B	1.32B	877.56M	1.10B
Net Income	475.76M	507.69M	660.51M	743.32M	454.76M	634.16M
Balance Sheet
Total Assets	16.91B	13.63B	11.83B	11.25B	8.63B	7.19B
Cash, Cash Equivalents and Short-Term Investments	4.12B	4.07B	3.45B	3.11B	1.35B	1.73B
Total Debt	2.07B	2.31B	849.96M	1.13B	501.83M	9.86M
Total Liabilities	12.61B	10.44B	7.82B	7.57B	5.43B	4.02B
Stockholders Equity	4.15B	3.04B	4.00B	3.67B	3.20B	3.17B
Cash Flow
Free Cash Flow	396.00M	1.59B	1.28B	1.03B	-275.52M	65.93M
Operating Cash Flow	464.00M	1.76B	1.59B	1.13B	-151.11M	163.62M
Investing Cash Flow	-105.00M	-991.28M	-658.99M	84.18M	-254.92M	-401.66M
Financing Cash Flow	-386.00M	-335.04M	-669.10M	453.88M	17.11M	-216.03M

Segue Group Co., Ltd. Technical Analysis

• Technical Analysis Sentiment: Neutral
• Last Price: 657.00
• 50DMA: Negative
• 100DMA: Negative
• 200DMA: Positive
• MACD: Positive
• RSI: Neutral
• STOCH: Neutral

Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For JP:3968, the sentiment is Neutral. The current price of 657 is above the 20-day moving average (MA) of 654.35, below the 50-day MA of 692.54, and above the 200-day MA of 585.05, indicating a neutral trend. The MACD of -22.41 indicates Positive momentum. The RSI at 41.23 is Neutral, neither overbought nor oversold. The STOCH value of 27.10 is Neutral, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Neutral sentiment for JP:3968.

Segue Group Co., Ltd. Peers Comparison

Name	Overall Rating	Market Cap	P/E Ratio	ROE	Dividend Yield	Revenue Growth	EPS Growth
3837	81 Outperform	¥29.72B	21.82	―	2.18%	9.56%	30.03%
2185	79 Outperform	¥23.99B	10.99	―	3.06%	-6.49%	4.98%
3968	78 Outperform	¥19.92B	23.16	―	1.72%	26.24%	29.73%
9799	77 Outperform	¥20.70B	15.92	―	2.43%	5.57%	12.08%
2335	71 Outperform	¥16.61B	14.71	―	3.60%	2.46%	-5.85%
Sector *	61 Neutral	$37.18B	12.37	-10.20%	1.83%	8.50%	-7.62%
6572	56 Neutral	¥18.58B	20.96	―	1.75%	13.47%	296.94%

Segue Group Co., Ltd. Corporate Events

Segue Group to Receive Dividends from Subsidiaries

Segue Group Co., Ltd. has announced that it will receive dividends totaling JPY 602,792 thousand from three of its consolidated subsidiaries. This dividend income will be recorded as operating revenue in the company’s non-consolidated financial statements for the fiscal year ending December 2025, but will not affect the consolidated financial results.

The most recent analyst rating on (JP:3968) stock is a Buy with a Yen806.00 price target. To see the full list of analyst forecasts on Segue Group Co., Ltd. stock, see the JP:3968 Stock Forecast page.

Segue Group Celebrates Anniversary with Employee Incentive

Segue Group Co., Ltd. has announced a special incentive payment to members of its Employee Shareholding Association in celebration of J’s Communication Co., Ltd.’s 30th anniversary. This initiative aims to boost employee engagement and participation in management, contributing to corporate value by increasing share ownership among employees. The impact on future business performance is expected to be minor.

The most recent analyst rating on (JP:3968) stock is a Hold with a Yen677.00 price target. To see the full list of analyst forecasts on Segue Group Co., Ltd. stock, see the JP:3968 Stock Forecast page.

Segue Group Reports Robust Financial Growth in 2025

Segue Group Co., Ltd. reported significant financial growth for the nine months ending September 30, 2025, with net sales increasing by 28.3% and operating profit surging by 125.7% year-on-year. The company’s strategic decisions, including a stock split and an absorption-type merger, have positively impacted its financial performance and market positioning, indicating a strong outlook for stakeholders.

The most recent analyst rating on (JP:3968) stock is a Hold with a Yen677.00 price target. To see the full list of analyst forecasts on Segue Group Co., Ltd. stock, see the JP:3968 Stock Forecast page.