Cluster Technology Co., Ltd. (4240) AI Stock Analysis

• Market Cap: ¥2.49B
• Dividend Yield: 1.33%
• Average Volume (3M): 28.24K
• Price to Earnings (P/E): 12.3
• Beta (1Y): 0.95
• Revenue Growth: 35.32%
• EPS Growth: 304.33%
• Country: JP
• Employees: 72
• Sector: Technology
• Sector Strength: 88
• Industry: Hardware, Equipment & Parts
• EPS (TTM): N/A
• Shares Outstanding: 5,692,800
• 10 Day Avg. Volume: 23,290
• 30 Day Avg. Volume: 28,243
• PEG Ratio: 0.19
• Price to Book (P/B): 0.86
• Price to Sales (P/S): 1.39
• P/FCF Ratio: 12.57
• 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: 81 Outperform
• Price Target: ¥505.00 ▲(68.33% Upside)
• Action: Upgraded Date: 01/29/26
• Date: Action: Upgraded 01/29/26

The score is driven primarily by strong financial performance (profitability improvement, low leverage, and very strong free cash flow growth). Technicals are supportive due to a strong uptrend, but overbought RSI conditions add near-term risk. Valuation is favorable with a low P/E and a modest dividend yield.

Positive Factors

Strong balance sheet

An equity ratio of roughly 90% and minimal debt materially lower financial risk and preserve strategic optionality. Over the next several months this capital structure supports discretionary investment, resilience to demand swings, and low refinancing pressure, enhancing durable stability.

Robust cash generation

A 473% surge in free cash flow and an OCF/Net Income ratio of 1.48 indicate high-quality earnings and strong cash conversion. Persistent cash generation strengthens liquidity for capex, dividends, or M&A and lowers dependence on external financing, a durable operating advantage.

Revenue and margin improvement

Double-digit revenue growth alongside rising gross and net margins suggests scalable revenue streams and improving operational efficiency. Sustained margin expansion enhances reinvestment capacity and earnings durability, supporting longer-term profit resilience in hardware markets.

Negative Factors

Asset utilization weakness

Suboptimal asset utilization reduces returns on invested capital and can mute ROE improvements despite strong margins. If fixed or working capital sits idle, capital efficiency and long-term growth per unit of investment may lag peers until utilization and turnover improve.

Cost-discipline risk

Management must sustain cost controls to preserve recent margin gains; hardware firms face input and pricing pressure over time. A failure to maintain discipline would erode gross and net margins, making current profitability gains less durable across economic cycles.

Small operational scale

A 72-person workforce implies limited scale and potential capacity constraints for rapid expansion, R&D or multi-market execution. Small teams can increase single-point-of-failure and scaling risk, potentially constraining sustainable growth and competitive breadth over the medium term.

Cluster Technology Co., Ltd. Business Overview & Revenue Model

Company Description

Cluster Technology Co.,Ltd. manufactures and sells various resin composite materials in Japan. The company offers Epohard, a resin composite material that contains inorganic fillers, reinforcing materials, coloring materials, etc.; Epocluster, a functional resin composite material; and Pulseinjector, a single nozzle inkjet device. It also engages in assembly and processing of plastic molded products; manufacture and sale of molding dies; and sale of plastic molding materials. Cluster Technology Co.,Ltd. was incorporated in 1991 and is headquartered in Osaka, Japan.

How the Company Makes Money

Cluster Technology Co., Ltd. generates revenue through multiple streams, primarily by selling software licenses for its proprietary AI and big data analytics platforms. The company also offers cloud computing services on a subscription basis, which provides a steady income from businesses seeking scalable and flexible IT solutions. Additionally, Cluster Technology engages in consulting services, helping organizations implement its technologies effectively. Significant partnerships with major cloud service providers and enterprises further enhance its market reach and drive sales. The company's ability to adapt to market trends and provide tailored solutions to clients contributes positively to its earnings.

Cluster Technology Co., Ltd. Financial Statement Overview

Summary

Strong overall fundamentals: solid revenue growth (11.31%), improving profitability (gross margin 41.79%, net margin 9.84%), very low leverage with a high equity ratio (~90%), and sharply higher free cash flow (+473%) with good cash conversion (OCF/NI 1.48). Minor watchouts include maintaining cost discipline and improving asset utilization.

Income Statement

Cluster Technology Co., Ltd. exhibited robust financial performance with a strong revenue growth rate of 11.31% in 2025. The Gross Profit Margin increased to 41.79%, and the Net Profit Margin improved significantly to 9.84%. These improvements indicate solid operational efficiency and profitability. The EBIT and EBITDA margins also improved, showcasing enhanced operational management. However, the company should monitor cost management to sustain these margins.

Balance Sheet

The company's balance sheet is strong, characterized by a very low Debt-to-Equity Ratio due to minimal debt levels, indicating low financial risk. The Return on Equity (ROE) improved to 6.09%, reflecting better profitability for shareholders. The Equity Ratio remains high at approximately 90%, indicating a solid capital structure. This stability positions the company well for future growth, though there is room for improving asset utilization.

Cash Flow

The cash flow statements indicate a healthy Free Cash Flow growth rate of 473.22% in 2025, driven by operational efficiency improvements. The Operating Cash Flow to Net Income ratio is 1.48, suggesting strong cash conversion capabilities. The Free Cash Flow to Net Income ratio also indicates robust cash generation relative to earnings. Continued focus on capital expenditure efficiency can further enhance liquidity.

Breakdown	TTM	Mar 2025	Mar 2024	Mar 2023	Mar 2022	Mar 2021
Income Statement
Total Revenue	1.11B	1.02B	918.99M	925.05M	905.98M	736.73M
Gross Profit	468.43M	427.51M	391.17M	368.69M	383.12M	289.64M
EBITDA	197.25M	167.67M	133.88M	119.32M	130.80M	61.16M
Net Income	128.04M	100.66M	57.36M	59.29M	114.97M	31.68M
Balance Sheet
Total Assets	1.86B	1.84B	1.74B	1.71B	1.64B	1.47B
Cash, Cash Equivalents and Short-Term Investments	1.04B	989.05M	892.84M	875.78M	946.24M	871.17M
Total Debt	7.48M	10.80M	13.39M	11.73M	14.01M	16.23M
Total Liabilities	198.27M	184.39M	192.05M	211.65M	201.26M	152.06M
Stockholders Equity	1.66B	1.65B	1.55B	1.49B	1.43B	1.32B
Cash Flow
Free Cash Flow	0.00	113.22M	19.76M	-68.15M	77.43M	91.89M
Operating Cash Flow	0.00	148.56M	118.41M	27.41M	120.80M	106.07M
Investing Cash Flow	0.00	-49.76M	-98.95M	-95.59M	-43.51M	-14.18M
Financing Cash Flow	0.00	-2.59M	-2.40M	-2.27M	-2.23M	-1.58M

Cluster Technology Co., Ltd. Technical Analysis

• Technical Analysis Sentiment: Positive
• Last Price: 300.00
• 50DMA: Positive
• 100DMA: Positive
• 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:4240, the sentiment is Positive. The current price of 300 is below the 20-day moving average (MA) of 425.40, below the 50-day MA of 367.18, and below the 200-day MA of 331.25, indicating a bullish trend. The MACD of 20.53 indicates Positive momentum. The RSI at 56.38 is Neutral, neither overbought nor oversold. The STOCH value of 45.06 is Neutral, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Positive sentiment for JP:4240.

Cluster Technology Co., Ltd. Peers Comparison

Name	Overall Rating	Market Cap	P/E Ratio	ROE	Dividend Yield	Revenue Growth	EPS Growth
4240	81 Outperform	¥2.49B	12.32	―	1.33%	35.32%	304.33%
6866	79 Outperform	¥105.76B	19.22	―	3.23%	7.28%	4.16%
6951	78 Outperform	¥351.36B	21.69	―	2.04%	-0.69%	-29.88%
6777	73 Outperform	¥232.98B	37.77	25.32%	2.30%	6.85%	10.88%
6853	73 Outperform	¥21.82B	21.76	―	2.93%	-1.58%	12.24%
Sector *	61 Neutral	$37.18B	12.37	-10.20%	1.83%	8.50%	-7.62%
6858	59 Neutral	¥10.54B	24.74	―	2.45%	15.66%	-69.17%

Cluster Technology Co., Ltd. Corporate Events

Cluster Technology Delivers Strong Q3 Profit Growth Amid Conservative Dividend Policy

Cluster Technology Co., Ltd. reported strong results for the third quarter of the fiscal year ending March 2026, with net sales rising 37.6% year on year to ¥949 million and operating profit surging 252.7% to ¥155 million. Ordinary profit climbed 244.8% to ¥158 million and quarterly profit jumped 311.8% to ¥133 million, lifting basic earnings per share to ¥23.50 from ¥5.71 a year earlier.

The company’s financial position remained solid, as total assets increased modestly to ¥1,964 million while net assets rose to ¥1,762 million, preserving a high capital adequacy ratio of 89.7% and pushing net assets per share up to ¥309.65. Despite the sharp profit growth, the firm maintained a zero dividend for the second quarter, indicating a continued focus on retaining earnings to support future operations and balance sheet strength rather than immediate shareholder payouts.

The most recent analyst rating on (JP:4240) stock is a Buy with a Yen462.00 price target. To see the full list of analyst forecasts on Cluster Technology Co., Ltd. stock, see the JP:4240 Stock Forecast page.