Applied Technology Co., Ltd. (4356) AI Stock Analysis

• Market Cap: ¥10.06B
• Dividend Yield: 1.61%
• Average Volume (3M): 4.91K
• Price to Earnings (P/E): 11.5
• Beta (1Y): 0.19
• Revenue Growth: -3.26%
• EPS Growth: 34.51%
• Country: JP
• Employees: 265
• Sector: Technology
• Sector Strength: 88
• Industry: Information Technology Services
• EPS (TTM): 36.06
• Shares Outstanding: 5,716,800
• 10 Day Avg. Volume: 4,760
• 30 Day Avg. Volume: 4,913
• PEG Ratio: 0.44
• Price to Book (P/B): 1.69
• Price to Sales (P/S): 1.42
• P/FCF Ratio: 7.97
• 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: 76 Outperform
• Price Target: ¥2,046.00 ▲(10.42% Upside)
• Action: Reiterated Date: 02/18/26
• Date: Action: Reiterated 02/18/26

Score is driven primarily by strong financial performance (debt-free balance sheet and improved 2025 earnings/cash flow despite a revenue dip) and supportive valuation (low P/E plus dividend). Technical indicators are the main offset, with negative MACD and the stock trading below key moving averages.

Positive Factors

Debt-free balance sheet

Zero reported debt materially reduces financial risk and preserves strategic optionality. A debt-free balance sheet supports sustained investment, dividends, or buybacks without refinancing pressure, improving resilience across economic cycles and over the next several months.

Strong cash generation

Sharp FCF and OCF improvement in 2025 strengthens the company's ability to self-fund growth, pay dividends, and absorb shocks. Reliable cash conversion underpins long-term capital allocation and reduces dependency on external financing for strategic initiatives.

Margin resilience

Profitability gains despite a modest revenue decline indicate cost control and pricing power. Sustained margin resilience supports durable earnings and free cash flow, making earnings quality less sensitive to short-term top-line volatility over the medium term.

Negative Factors

Top-line softness

A near-5% revenue decline weakens growth momentum and may limit operating leverage going forward. If persistent, top-line softness can constrain reinvestment and margin expansion, making medium-term earnings improvements harder to sustain without new revenue drivers.

Declining ROE trend

A downward ROE trend signals diminishing returns on deployed capital, which can erode long-term shareholder value creation. Lower capital efficiency may reflect tougher competitive dynamics or less scalable opportunities, reducing upside over a multi-quarter horizon.

Free cash flow variability

Material year-to-year FCF volatility increases forecasting risk for investments and distributions. Irregular cash flow makes capital planning and consistent dividend or buyback policies harder to maintain, heightening execution risk over the coming quarters.

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

Company Description

Applied Technology Co., Ltd. provides engineering services in the fields of manufacturing, civil engineering and construction, disaster prevention, environment, and GIS in Japan. The company offers quotation support system, CAD and PLM integration, information management, after-sales services support and web workflow for manufacturing field; and structural analysis system, asset management, CIMs, and mobile terminal system for civil engineering and construction application. It provides disaster prevention and seismic simulation, disaster prevention information system, and weather cloud for disaster prevention/mitigation field; and terrestrial environment and water environment simulation, environmental assessment, environmental policy and building evaluation support services for environmental application. In addition, the company offers GIS services, which include goggle maps platform, YOLP premier, and GIS consulting and application development. The company was incorporated in 1984 and is headquartered in Osaka, Japan.

How the Company Makes Money

Applied Technology Co., Ltd. generates revenue primarily through the sale of its technology products and services. The company's key revenue streams include licensing fees from its software products, fees from IT consulting services, and income from system integration projects. Additionally, the company may engage in strategic partnerships with other technology firms to expand its service offerings and reach a wider customer base. These collaborations can lead to shared revenue opportunities and enhanced market presence, contributing significantly to the company's earnings. The company's focus on innovation and its ability to deliver customized solutions to meet the specific needs of its clients are also critical factors in its revenue generation.

Applied Technology Co., Ltd. Financial Statement Overview

Summary

Strong financial quality overall: a debt-free balance sheet, improving earnings despite a ~4.9% 2025 revenue decline, and sharply higher operating cash flow/free cash flow in 2025. Key risks are recent top-line softness and a downward trend in ROE versus earlier years.

Income Statement

Revenue has grown solidly over the long run (2020–2024), but 2025 shows a modest decline (about -4.9% year over year). Profitability remains healthy: gross profit dollars improved in 2025 versus 2024, and operating profit and net income also rose, indicating margin resilience despite the revenue dip. The main watch-out is the recent top-line slowdown and some margin pressure versus earlier years (2021–2023 were stronger).

Balance Sheet

The balance sheet is very conservative with zero debt across all reported years, which significantly reduces financial risk. Equity and total assets have steadily increased, supporting balance-sheet strength and flexibility. The primary limitation is that returns on equity have trended down from earlier highs (though still positive), suggesting incremental capital is generating somewhat lower returns than in prior years.

Cash Flow

Cash generation is a clear strength: operating cash flow and free cash flow rose sharply in 2025 versus 2024, and free cash flow has grown strongly overall (with some volatility in 2022–2023). Free cash flow has generally tracked net income closely in prior years, supporting earnings quality. The key weakness is variability in year-to-year free cash flow growth, which can make near-term cash performance less predictable.

Breakdown	Dec 2025	Dec 2024	Dec 2023	Dec 2022	Dec 2021
Income Statement
Total Revenue	7.45B	7.84B	7.42B	7.08B	6.45B
Gross Profit	2.28B	1.99B	2.14B	2.00B	1.76B
EBITDA	1.25B	988.52M	1.03B	1.01B	968.42M
Net Income	914.87M	725.66M	716.06M	736.39M	711.04M
Balance Sheet
Total Assets	8.23B	7.14B	6.57B	5.75B	5.00B
Cash, Cash Equivalents and Short-Term Investments	778.19M	3.93B	3.39B	3.07B	2.69B
Total Debt	0.00	0.00	0.00	0.00	0.00
Total Liabilities	1.98B	1.64B	1.62B	1.34B	1.42B
Stockholders Equity	6.25B	5.51B	4.95B	4.41B	3.58B
Cash Flow
Free Cash Flow	1.33B	718.01M	492.50M	504.23M	557.22M
Operating Cash Flow	1.36B	750.52M	530.71M	526.45M	582.12M
Investing Cash Flow	-40.23M	-43.16M	-40.28M	-29.38M	-41.30M
Financing Cash Flow	-170.82M	-170.45M	-170.73M	-113.60M	-57.63M

Applied Technology Co., Ltd. Technical Analysis

• Technical Analysis Sentiment: Negative
• Last Price: 1853.00
• 50DMA: Negative
• 100DMA: Negative
• 200DMA: Positive
• MACD: Negative
• RSI: Neutral
• STOCH: Neutral

Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For JP:4356, the sentiment is Negative. The current price of 1853 is above the 20-day moving average (MA) of 1779.85, above the 50-day MA of 1807.96, and above the 200-day MA of 1736.29, indicating a neutral trend. The MACD of -12.49 indicates Negative momentum. The RSI at 45.69 is Neutral, neither overbought nor oversold. The STOCH value of 45.53 is Neutral, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Negative sentiment for JP:4356.

Applied Technology Co., Ltd. Peers Comparison

Name	Overall Rating	Market Cap	P/E Ratio	ROE	Dividend Yield	Revenue Growth	EPS Growth
4356	76 Outperform	¥10.06B	11.54	―	1.61%	-3.26%	34.51%
4442	73 Outperform	¥9.45B	11.18	―	0.95%	9.36%	-1.69%
3799	65 Neutral	¥9.27B	15.16	―	4.16%	4.52%	51.81%
5578	63 Neutral	¥8.49B	23.05	―	0.55%	27.16%	29.27%
Sector *	61 Neutral	$37.18B	12.37	-10.20%	1.83%	8.50%	-7.62%
155A	58 Neutral	¥9.50B	45.06	―	―	30.13%	9.94%
3657	46 Neutral	¥10.22B	-3.21	―	5.03%	3.97%	63.06%