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

• Market Cap: ¥20.27B
• Dividend Yield: 1.82%
• Average Volume (3M): 150.76K
• Price to Earnings (P/E): 41.7
• Beta (1Y): 1.17
• Revenue Growth: 20.91%
• EPS Growth: -26.43%
• Country: JP
• Employees: 709
• Sector: Technology
• Sector Strength: 88
• Industry: Information Technology Services
• EPS (TTM): 8.28
• 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: Hold
• Number of Analyst Covering: 0

• Rating: 68 Neutral
• Price Target: ¥677.00 ▲(2.42% Upside)

The overall stock score of 68 reflects strong financial performance and bullish technical indicators, tempered by high valuation concerns. The company's robust revenue growth and efficient operations are significant strengths, but the high P/E ratio and overbought technical indicators suggest caution. Investors should monitor profitability improvements and leverage management closely.

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

Company Description

Segue Group Co., Ltd. (3968) is a Japan-based company primarily engaged in providing information technology services. The company operates in various sectors, including network integration, security solutions, and IT infrastructure development. Segue Group delivers comprehensive IT services that encompass consulting, system integration, and managed services, leveraging its expertise to assist clients in optimizing their IT environments.

How the Company Makes Money

Segue Group Co., Ltd. generates revenue through a diversified model primarily centered around its IT service offerings. The company earns income by providing consulting services, where it advises clients on the best IT practices and solutions tailored to their specific needs. Additionally, Segue Group makes money through system integration projects, which involve designing and implementing IT systems that enhance operational efficiency for businesses. Managed services also contribute to its revenue streams, as the company offers ongoing IT support and maintenance for client systems. Key partnerships with technology vendors and continued investment in innovative IT solutions further bolster Segue Group's earnings, ensuring a steady flow of income from a broad client base across multiple industries.

Segue Group Co., Ltd. Financial Statement Overview

Summary

Segue Group Co., Ltd. exhibits strong revenue growth and efficient operations, although profitability margins have faced pressure in recent years. The balance sheet reflects increased leverage, yet remains stable. Improved cash flow generation suggests robust cash management, though capital allocation could be optimized. Overall, the company is well-positioned for continued growth but should focus on enhancing profitability and managing leverage effectively.

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: Positive
• Last Price: 661.00
• 50DMA: Positive
• 100DMA: Positive
• 200DMA: Positive
• MACD: Negative
• RSI: Neutral
• STOCH: Negative

Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For JP:3968, the sentiment is Positive. The current price of 661 is above the 20-day moving average (MA) of 641.75, above the 50-day MA of 649.82, and above the 200-day MA of 552.65, indicating a bullish trend. The MACD of 6.39 indicates Negative momentum. The RSI at 58.64 is Neutral, neither overbought nor oversold. The STOCH value of 83.84 is Negative, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Positive 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
2185	78 Outperform	¥21.50B	10.03	―	3.19%	-1.95%	34.62%
9799	74 Outperform	¥16.25B	13.30	―	3.16%	6.50%	5.16%
2335	71 Outperform	¥16.93B	13.30	―	3.47%	2.38%	32.36%
3968	68 Neutral	¥20.27B	41.69	―	1.82%	20.91%	-26.43%
3837	67 Neutral	¥23.39B	21.78	―	1.96%	9.83%	23.34%
Sector *	61 Neutral	$37.18B	12.37	-10.20%	1.83%	8.50%	-7.62%
6572	60 Neutral	¥21.33B	45.67	―	1.64%	13.47%	296.94%

Segue Group Co., Ltd. Corporate Events

Segue Group Co., Ltd. Sells Investment Securities to Boost Financial Position

Segue Group Co., Ltd. has announced the sale of a portion of its investment securities, realizing a gain of ¥140 million. This move is aimed at improving asset efficiency and strengthening the company’s financial position. The gain will be recorded as non-operating revenue in the third quarter of the fiscal year ending December 2025, with the full impact on the annual results still under review.

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 Revises 2025 Earnings Forecast Upwards Amid Strong IT Demand

Segue Group Co., Ltd. has announced an upward revision of its full-year consolidated earnings forecast for 2025, citing increased IT investments by government bodies and significant progress in securing large-scale projects. The company has experienced a substantial rise in order intake and backlog, prompting the revision, although the dividend forecast remains unchanged.

Segue Group Reports Strong Sales Growth Amid Profit Decline

Segue Group Co., Ltd. reported a significant increase in net sales and operating profit for the first half of the fiscal year ending December 31, 2025, with net sales reaching 10,000 million yen, an 18.9% increase year-over-year. However, ordinary profit and profit attributable to owners of the parent decreased by 8.4% and 7.2%, respectively. The company also announced a revision in its financial forecast for the fiscal year, expecting a 32.5% increase in net sales and a 110% rise in operating profit, indicating a positive outlook for the remainder of the year.