Densan System Holdings Co. Ltd. (4072) AI Stock Analysis

• Market Cap: ¥30.58B
• Dividend Yield: 2.22%
• Average Volume (3M): 291.29K
• Price to Earnings (P/E): 13.3
• Beta (1Y): 0.66
• Revenue Growth: 9.57%
• EPS Growth: 315.38%
• Country: JP
• Employees: 1,005
• Sector: Technology
• Sector Strength: 88
• Industry: Information Technology Services
• EPS (TTM): 61.75
• Shares Outstanding: 10,798,341
• 10 Day Avg. Volume: 113,110
• 30 Day Avg. Volume: 291,286
• PEG Ratio: 0.24
• Price to Book (P/B): 1.57
• Price to Sales (P/S): 0.57
• P/FCF Ratio: 9.41
• 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): 304
• Revenue Forecast (FY): ¥70.70B

• Rating: 73 Outperform
• Price Target: ¥3,158.00 ▼(-12.52% Downside)
• Action: Reiterated Date: 02/11/26
• Date: Action: Reiterated 02/11/26

The score is driven primarily by strong financial quality (especially a very conservative balance sheet) and attractive valuation (low P/E and a ~3% dividend yield). Offsetting these positives, technical indicators point to weak near-term momentum with the stock trading below key moving averages and a negative MACD.

Positive Factors

Conservative Balance Sheet

Very low leverage and rising equity materially increase financial resilience and flexibility. Over a multi-quarter horizon this supports capacity to fund organic growth, maintain the dividend, pursue opportunistic M&A or cyclical cushions without needing external capital.

Stable Revenue Growth Trend

Multi-year top-line expansion with a meaningful 2025 pickup indicates durable demand for services. Sustained revenue growth supports scale benefits, steadier cash flows and the ability to invest in product/service development, helping maintain competitive position.

Strong Cash Conversion in 2025

High FCF-to-net-income in 2025 demonstrates that reported profits translate into real cash available for reinvestment, dividends or debt reduction. Over several quarters this underpins capital allocation optionality and lowers refinancing risk compared with low-conversion peers.

Negative Factors

Modest and Variable Margins

Margins are low for an IT services company and have swung materially year-to-year, limiting earnings flexibility. Persistently modest margins constrain the firm's ability to absorb cost inflation or competitive pricing pressure and reduce long-term return generation.

Choppy Cash Flow History

Year-to-year volatility in operating and free cash flow, together with a relatively small OCF-to-revenue ratio, hampers predictability of available funds for capex and distribution. This raises execution risk for multi-quarter investments and budgeting.

Inconsistent Returns on Equity

ROE improvement in 2025 shows capacity to enhance returns, but the lack of a steady upward trend signals sensitivity to business cycles or operational volatility. Inconsistent ROE complicates forecasting of shareholder value creation over the next several quarters.

Densan System Holdings Co. Ltd. Business Overview & Revenue Model

Company Description

Densan System Holdings Co., Ltd., through its subsidiaries, provides information technology consulting and software development services in Japan. The company provides solutions in the areas of data processing, systems-integration, and software development; IT services and payment acceptance and settlement services. The company was founded in 1967 and is headquartered in Gifu, Japan.

How the Company Makes Money

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Densan System Holdings Co. Ltd. Financial Statement Overview

Summary

Strong balance sheet strength (very low leverage and rising equity) supports resilience. Income statement shows steady growth and a meaningful profitability rebound in 2025, though margins remain modest and somewhat volatile. Cash flow conversion is good in 2025 but has been uneven year-to-year.

Income Statement

Revenue has grown steadily over time (2020–2025), with a strong pickup in the latest year (2025 revenue growth ~7.7% vs. ~2.8% in 2024). Profitability improved meaningfully in 2025 (net margin ~4.3% vs. ~3.0% in 2024; operating margin ~5.5% vs. ~3.8%), but margins remain modest for the sector and have been somewhat volatile versus earlier years (stronger margins in 2021–2022, weaker in 2024). Overall: solid growth and improving earnings power, with some margin variability.

Balance Sheet

The balance sheet is very conservatively positioned: debt is low and trending down, and leverage is minimal (debt-to-equity ~0.03 in 2025, improved from ~0.05 in 2024). Shareholders’ equity has grown consistently, supporting financial flexibility. Returns on equity are healthy (about ~11.8% in 2025, up from ~8.4% in 2024), though not consistently rising year-to-year. Overall: strong capitalization with low leverage and solid returns.

Cash Flow

Cash generation is generally supportive: free cash flow is strong in 2025 (~¥4.1B) and closely tracks earnings (free cash flow at ~95% of net income in 2025). However, cash flow has been choppy across years (notable decline in 2024 vs. 2023), and operating cash flow as a share of the revenue base remains relatively light (about ~10% in 2025). Overall: good conversion of profits into cash, but with volatility in yearly cash flow performance.

Breakdown	TTM	Dec 2025	Dec 2024	Dec 2023	Dec 2022	Dec 2021
Income Statement
Total Revenue	63.28B	68.13B	61.26B	59.59B	53.48B	50.36B
Gross Profit	9.64B	11.02B	9.29B	10.60B	9.98B	9.23B
EBITDA	3.96B	4.57B	3.21B	4.01B	4.06B	3.84B
Net Income	2.02B	2.90B	1.85B	2.00B	2.35B	1.98B
Balance Sheet
Total Assets	76.48B	69.11B	61.75B	57.05B	72.17B	51.39B
Cash, Cash Equivalents and Short-Term Investments	50.81B	39.98B	34.81B	31.16B	45.95B	31.07B
Total Debt	5.60B	629.00M	1.07B	1.53B	1.49B	1.09B
Total Liabilities	53.28B	44.23B	39.45B	36.27B	52.50B	33.78B
Stockholders Equity	22.98B	24.64B	22.08B	20.58B	19.46B	17.41B
Cash Flow
Free Cash Flow	0.00	4.10B	2.73B	4.69B	1.34B	1.92B
Operating Cash Flow	0.00	4.33B	3.02B	5.51B	1.91B	2.53B
Investing Cash Flow	0.00	-1.02B	239.00M	-852.00M	-1.72B	-1.23B
Financing Cash Flow	0.00	-1.05B	-765.00M	-941.00M	-5.00M	-719.00M

Densan System Holdings Co. Ltd. Technical Analysis

• Technical Analysis Sentiment: Negative
• Last Price: 3610.00
• 50DMA: Negative
• 100DMA: Negative
• 200DMA: Negative
• MACD: Negative
• RSI: Neutral
• STOCH: Positive

Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For JP:4072, the sentiment is Negative. The current price of 3610 is above the 20-day moving average (MA) of 2968.50, above the 50-day MA of 3169.38, and above the 200-day MA of 3225.34, indicating a bearish trend. The MACD of -76.55 indicates Negative momentum. The RSI at 37.75 is Neutral, neither overbought nor oversold. The STOCH value of 18.80 is Positive, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Negative sentiment for JP:4072.

Densan System Holdings Co. Ltd. Peers Comparison

Name	Overall Rating	Market Cap	P/E Ratio	ROE	Dividend Yield	Revenue Growth	EPS Growth
3837	81 Outperform	¥26.71B	15.44	―	2.18%	9.56%	30.03%
2359	80 Outperform	¥31.14B	8.18	―	2.93%	2.11%	5.55%
4396	76 Outperform	¥22.82B	11.39	―	1.70%	22.25%	31.88%
4072	73 Outperform	¥30.58B	13.32	―	2.22%	9.57%	315.38%
3916	72 Outperform	¥29.46B	16.05	―	2.45%	19.04%	30.67%
4725	65 Neutral	¥30.97B	10.75	10.34%	4.82%	-3.03%	38.83%
Sector *	61 Neutral	$37.18B	12.37	-10.20%	1.83%	8.50%	-7.62%