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

• Market Cap: ¥16.74B
• Dividend Yield: 1.72%
• Average Volume (3M): 150.76K
• Price to Earnings (P/E): 19.5
• Beta (1Y): 1.23
• 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: 66 Neutral
• Price Target: ¥594.00 ▼(-9.59% Downside)

The score is primarily supported by strong financial performance (revenue growth, solid margins, and improving cash flow). This is meaningfully offset by very weak technical conditions (price below all major moving averages and oversold/negative momentum indicators). Valuation is moderate with a modest dividend yield, providing limited support.

Positive Factors

Multi-year revenue growth

Sustained, large revenue expansion over several years indicates durable demand for the company’s IT integration and infrastructure services. This scale increases pricing leverage, spreads fixed costs, and supports long-term reinvestment in service capabilities and client relationships.

Improved cash generation

Transition to positive operating and free cash flow reflects stronger working-capital management and operational cash conversion. Reliable cash generation reduces financing reliance, funds capex/dividends or debt paydown, and underpins sustainable investment in product and service delivery.

Stable gross and operating margins

Consistently healthy gross margins and stable EBIT/EBITDA point to effective cost control and operational efficiency in systems integration and managed services. Durable margins help absorb pricing cycles and support steady cash flow generation over multiple quarters.

Negative Factors

Declining net profit margin

A marked fall in net margin reduces retained earnings and shareholder returns and signals mounting cost pressures or weaker pricing power. Persistently lower net profitability limits buffer against downturns and constrains long-term capacity to reinvest in growth initiatives.

Rising leverage and lower equity ratio

Increased leverage and a falling equity ratio raise financial fixed-cost obligations and reduce covenant/headroom flexibility. Over a multi-month horizon higher debt amplifies refinancing and interest-rate risks and can limit strategic investments or acquisitions.

Capital allocation and ROE weakness

A sharp ROE decline plus an unusually high free-cash-flow-to-net-income ratio suggest potential inefficiencies in reinvestment or one-off timing effects. Poor capital allocation or falling returns on equity can erode shareholder value and constrain long-term growth prospects.

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

Strong multi-year revenue growth and healthy gross margin support a solid score. Offsetting factors include a notable decline in net profit margin by 2024, increased leverage (higher debt-to-equity), and weaker recent return on equity, despite improved operating and free cash flow generation.

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: Negative
• Last Price: 657.00
• 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:3968, the sentiment is Negative. The current price of 657 is above the 20-day moving average (MA) of 579.20, above the 50-day MA of 654.13, and above the 200-day MA of 593.21, indicating a bearish trend. The MACD of -39.21 indicates Positive momentum. The RSI at 33.53 is Neutral, neither overbought nor oversold. The STOCH value of 23.65 is Neutral, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Negative 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	¥30.29B	20.00	―	2.18%	9.56%	30.03%
2185	79 Outperform	¥23.78B	10.89	―	3.06%	-6.49%	4.98%
9799	77 Outperform	¥20.72B	15.93	―	2.43%	5.57%	12.08%
2335	71 Outperform	¥15.81B	11.30	―	3.60%	2.46%	-5.85%
3968	66 Neutral	¥16.74B	19.46	―	1.72%	26.24%	29.73%
Sector *	61 Neutral	$37.18B	12.37	-10.20%	1.83%	8.50%	-7.62%
6572	56 Neutral	¥15.14B	16.94	―	1.75%	13.47%	296.94%

Segue Group Co., Ltd. Corporate Events

Segue Group Revamps Shareholder Benefits, Launches Premium Points Program Through 2029

Segue Group Co., Ltd. has approved a comprehensive revision of its shareholder benefits plan, building on its existing digital gift framework to further incentivize medium- to long-term shareholding and improve stock liquidity. From the record date of December 31, 2026, shareholders holding 1,000 shares or more as of each year-end will receive benefit points through the newly established Segue Group Premium Benefits Club, which can be redeemed for a wide range of products and experiences, converted into shared WILLsCoin for broader reward options, or donated to social contribution activities. The company has set a tiered structure that scales benefit points with the size of shareholding and commits, absent major environmental changes, to maintain this benefits program through the fiscal year ending December 31, 2029, signaling a stable, shareholder-friendly capital policy aimed at reinforcing long-term relationships with investors.

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 Lifts 2025 Earnings Forecast and Raises 2026 Medium-Term Targets on Strong Public-Sector Demand

Segue Group Co., Ltd. has raised its consolidated earnings forecast for the fiscal year ended December 31, 2025, projecting modestly higher net sales but substantially stronger profits, with operating profit expected to rise about 24% and profit attributable to owners of the parent about 50% versus its previous forecast. The upgrade reflects robust performance in existing businesses, a significant large-scale public-sector order under the GSS project that boosted orders and backlog, stronger profit management and higher-margin projects, as well as gains from the sale of investment securities, while the dividend forecast remains unchanged. On the back of these favorable conditions, the company has also lifted its numerical targets for the final year of its Medium-Term Management Plan to December 2026, setting higher goals for net sales and profitability—including a challenge target incorporating potential M&A—as it pursues enhanced corporate value under its “Segue Vision 2030.”

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 to Raise Capital via Public Share Offering and CEO’s Secondary Sale

Segue Group Co., Ltd. has approved the issuance of 4.6 million new shares of common stock through a public offering, with pricing to be set in early February 2026 based on the Tokyo Stock Exchange closing price within a 0.90–1.00 range, and all shares to be underwritten and purchased by a syndicate of securities firms. In parallel, President and CEO Yasuyuki Aisu will conduct a secondary offering of 625,000 existing shares via the same underwriters at the same offer price, with both transactions contingent on the effectiveness of a securities registration statement, potentially broadening the company’s shareholder base while slightly diluting existing equity and enabling partial divestment by the top executive.

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 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.