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

• Market Cap: ¥31.85B
• Dividend Yield: 2.22%
• Average Volume (3M): 291.29K
• Price to Earnings (P/E): 10.9
• Beta (1Y): 0.65
• 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: ¥3,540.00 ▼(-1.94% 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 give the company strong financial flexibility and resilience. This conservative capital structure reduces refinancing and interest-rate risk, enabling capital allocation to growth or dividends and absorbing cyclical downturns over the next several months.

Consistent revenue growth

A multi-year trend of revenue expansion with a notable pickup in 2025 indicates durable demand and market traction for its IT services. Continued top-line growth supports margin recovery, scale benefits, and predictable cash flows across a 2–6 month horizon and beyond.

Strong free cash flow conversion

High FCF that closely tracks reported earnings signals earnings quality and the ability to fund dividends, capex, or buybacks from internal cash. Reliable cash conversion enhances financial optionality and supports durable capital returns or investment over coming quarters.

Negative Factors

Modest and variable margins

Profitability remains low relative to many IT services peers and has fluctuated year-to-year. Modest margins limit the company’s internal funding for growth and reduce resilience to cost inflation or pricing pressure, constraining sustainable earnings power over months ahead.

Choppy cash flow history

Although FCF was strong in 2025, historical volatility in yearly cash flows and a drop in 2024 highlight sensitivity to working capital or project timing. Such variability can strain planning and limit predictable reinvestment or distributions across a medium-term horizon.

Returns not steadily improving

While ROE improved in 2025, the lack of a consistent upward trend suggests returns are dependent on cyclical profit swings rather than structural efficiency gains. This inconsistency may cap long-term shareholder return potential and hinder reliable profitability expansion.

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

Densan System Holdings generates revenue through multiple streams, primarily by providing custom software development and system integration services to its clients. The company charges fees for its consulting services, project management, and ongoing support and maintenance of IT systems. Additionally, it earns income from licensing proprietary software products and providing cloud-based solutions. Strategic partnerships with other technology providers and enterprises in various industries enhance its market reach and contribute significantly to its earnings by expanding service offerings and client access.

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	51.28B
Cash, Cash Equivalents and Short-Term Investments	50.81B	39.98B	19.28B	15.91B	12.53B	13.67B
Total Debt	5.60B	629.00M	1.07B	1.53B	1.49B	1.09B
Total Liabilities	53.28B	44.23B	39.45B	36.28B	52.51B	33.68B
Stockholders Equity	22.98B	24.64B	22.08B	20.58B	19.45B	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: Positive
• RSI: Neutral
• STOCH: Neutral

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 3111.95, above the 50-day MA of 3366.66, and above the 200-day MA of 3184.71, indicating a bearish trend. The MACD of -108.88 indicates Positive momentum. The RSI at 34.08 is Neutral, neither overbought nor oversold. The STOCH value of 20.76 is Neutral, 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	¥30.98B	20.46	―	2.18%	9.56%	30.03%
2359	80 Outperform	¥31.53B	11.00	―	2.93%	2.11%	5.55%
4396	76 Outperform	¥24.94B	14.82	―	1.70%	22.25%	31.88%
4072	73 Outperform	¥31.85B	10.89	―	2.22%	9.57%	315.38%
3916	72 Outperform	¥31.00B	13.64	―	2.45%	19.04%	30.67%
4725	65 Neutral	¥32.06B	9.93	10.34%	4.82%	-3.03%	38.83%
Sector *	61 Neutral	$37.18B	12.37	-10.20%	1.83%	8.50%	-7.62%