eSOL Co., Ltd. (4420) AI Stock Analysis

• Market Cap: ¥9.64B
• Dividend Yield: 1.1%
• Average Volume (3M): 54.95K
• Price to Earnings (P/E): 20.1
• Beta (1Y): 1.53
• Revenue Growth: 2.20%
• EPS Growth: -34.47%
• Country: JP
• Employees: 523
• Sector: Technology
• Sector Strength: 88
• Industry: Technology Distributors
• EPS (TTM): 6.62
• Shares Outstanding: 20,000,000
• 10 Day Avg. Volume: 83,630
• 30 Day Avg. Volume: 54,950
• PEG Ratio: 0.02
• Price to Book (P/B): 2.53
• Price to Sales (P/S): 1.06
• P/FCF Ratio: 12.14
• 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: 68 Neutral
• Price Target: ¥617.00 ▲(17.52% Upside)

The score is primarily driven by solid financial resilience (notably the debt-free balance sheet) and a 2024 earnings rebound, but tempered by historically volatile cash flow and a technically mixed setup with a negative MACD and the stock trading below key longer-term moving averages. Valuation is reasonable but not especially compelling given the modest dividend yield.

Positive Factors

Debt-Free Balance Sheet

A debt-free balance sheet reduces financial risk and interest burden, providing stability and flexibility for future investments.

Profitability Rebound

The rebound in profitability indicates improved operational efficiency and market conditions, supporting future growth potential.

Cash Flow Improvement

Improved cash flow enhances financial flexibility, enabling reinvestment in growth opportunities and reducing reliance on external financing.

Negative Factors

Volatile Cash Flow

Inconsistent cash flow can strain financial planning and limit the company's ability to invest steadily in growth initiatives.

Uneven Revenue Growth

Uneven revenue growth reflects potential market volatility and challenges in sustaining consistent demand across product lines.

Profitability Volatility

Volatile profitability indicates potential challenges in cost management and pricing power, affecting long-term margin sustainability.

eSOL Co., Ltd. Business Overview & Revenue Model

Company Description

eSOL Co.,Ltd. designs, plans, operates, and maintains embedded software solutions and logistics systems in Japan. The company offers real-time operating systems(RTOS) that include Extended T-Kernel, RTOS for embedded systems; POSIX, a compliant RTOS that provides support for pthread, signal, and inter process communication on the system level; process model-based RTOS with memory protection; compact RTOS with small footprint; and RTOS for multi-core processors, as well as software development kit for many-core processors. It also provides eBinder, a development suite for embedded software; FAT12/16/32, VFAT, and exFAT-compatible file systems for embedded systems; software platforms; and evaluation kits. In addition, the company offers application middleware, including graphical user interface (GUI), computer vision, and embedded database solutions; automotive software, such as AUBIST classic and adaptive platforms, and ECU diagnostics and reprogramming. Further, it develops and sells devices primarily focused on portable terminals, automotive printers, and sensor device products; and software systems to solve diversifying issues on the ground. The company was formerly known as ERG Co., Ltd. and changed its name to eSOL Co.,Ltd. in May 2001. eSOL Co.,Ltd. was founded in 1975 and is headquartered in Tokyo, Japan.

How the Company Makes Money

eSOL Co., Ltd. generates revenue primarily through the licensing of its real-time operating systems and middleware solutions to manufacturers and developers in various industries. The company also offers consulting services, technical support, and custom software development, which contribute to its income. Key revenue streams include software licensing fees, service contracts, and project-based custom development fees. Partnerships with hardware manufacturers and technology firms help eSOL extend its market reach and integrate its solutions into a wide array of embedded systems, further bolstering its earnings.

eSOL Co., Ltd. Financial Statement Overview

Summary

Financials are supported by a very conservative, debt-free balance sheet (Balance Sheet Score 88) and a strong profitability rebound in 2024 (Income Statement Score 74). The main constraint on the score is inconsistency: profits and cash flows have been volatile over the last few years, with negative operating/free cash flow in multiple years (Cash Flow Score 70).

Income Statement

Profitability rebounded sharply in 2024 with solid operating and net margins (EBIT margin ~9.4%, net margin ~7.5%) after losses in 2022 and a near-breakeven 2023. Revenue growth improved to ~3.7% in 2024, but the broader multi-year trajectory shows uneven growth and a clear earnings dip in 2021–2023, highlighting some cyclicality/volatility in results. Gross margin has also moved around year-to-year, suggesting profitability is not fully steady yet.

Balance Sheet

The balance sheet appears very conservative with no reported debt across the period, significantly reducing financial risk and interest burden. Equity remains sizable relative to assets, and return on equity recovered strongly in 2024 (~17.9%) after a weak 2023 and negative 2022, indicating improved profitability on the capital base. The main watch-out is that equity has not been consistently compounding (down vs. 2021–2023 levels), reflecting the impact of the prior earnings slump.

Cash Flow

Cash generation improved meaningfully in 2024 with positive operating cash flow (~¥1.10B) and free cash flow (~¥1.04B), and free cash flow broadly tracked net income (free cash flow to net income ~0.95). However, cash flow has been inconsistent: operating and free cash flow were negative in 2021 and 2023, implying working-capital or cash conversion volatility. Despite the strong 2024 rebound, the history suggests cash consistency remains a key risk area to monitor.

Breakdown	TTM	Dec 2024	Dec 2023	Dec 2022	Dec 2021	Dec 2020
Income Statement
Total Revenue	11.53B	11.91B	9.63B	8.87B	8.94B	9.04B
Gross Profit	3.61B	4.41B	3.30B	2.93B	2.80B	3.20B
EBITDA	691.52M	1.21B	20.56M	-274.00M	145.68M	762.42M
Net Income	461.62M	892.39M	136.72M	-357.83M	200.70M	676.28M
Balance Sheet
Total Assets	6.86B	6.99B	7.64B	7.21B	7.28B	7.47B
Cash, Cash Equivalents and Short-Term Investments	3.32B	3.27B	3.50B	3.98B	4.22B	4.67B
Total Debt	0.00	0.00	0.00	0.00	0.00	0.00
Total Liabilities	1.83B	2.00B	1.97B	1.80B	1.51B	1.72B
Stockholders Equity	5.03B	4.99B	5.66B	5.41B	5.78B	5.75B
Cash Flow
Free Cash Flow	0.00	1.04B	-161.09M	76.17M	-329.86M	912.70M
Operating Cash Flow	0.00	1.10B	-140.97M	161.40M	-199.71M	1.06B
Investing Cash Flow	0.00	-29.04M	-232.60M	-89.59M	-137.39M	-353.44M
Financing Cash Flow	0.00	-1.29B	-112.40M	-111.61M	-111.47M	-141.53M

eSOL Co., Ltd. Technical Analysis

• Technical Analysis Sentiment: Negative
• Last Price: 525.00
• 50DMA: Positive
• 100DMA: Negative
• 200DMA: Negative
• MACD: Positive
• RSI: Neutral
• STOCH: Positive

Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For JP:4420, the sentiment is Negative. The current price of 525 is below the 20-day moving average (MA) of 533.55, above the 50-day MA of 517.58, and below the 200-day MA of 533.82, indicating a neutral trend. The MACD of 0.14 indicates Positive momentum. The RSI at 47.48 is Neutral, neither overbought nor oversold. The STOCH value of 15.62 is Positive, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Negative sentiment for JP:4420.

eSOL Co., Ltd. Peers Comparison

Name	Overall Rating	Market Cap	P/E Ratio	ROE	Dividend Yield	Revenue Growth	EPS Growth
8137	74 Outperform	¥49.71B	18.02	―	4.12%	-4.88%	-26.05%
9880	73 Outperform	¥27.15B	20.87	―	3.25%	0.17%	21.01%
8023	72 Outperform	¥14.94B	8.95	―	4.62%	-2.98%	4.56%
4420	68 Neutral	¥9.64B	20.06	―	1.10%	2.20%	-34.47%
6638	66 Neutral	¥51.32B	8.89	―	3.07%	1.56%	1.72%
7537	65 Neutral	¥32.22B	10.98	―	5.16%	1.71%	-29.37%
Sector *	61 Neutral	$37.18B	12.37	-10.20%	1.83%	8.50%	-7.62%