D.I.System Co.,Ltd. (4421) AI Stock Analysis

• Market Cap: ¥2.94B
• Dividend Yield: 2.86%
• Average Volume (3M): 4.73K
• Price to Earnings (P/E): 10.9
• Beta (1Y): 0.29
• Revenue Growth: 5.74%
• EPS Growth: 5.97%
• Country: JP
• Employees: 735
• Sector: Technology
• Sector Strength: 88
• Industry: Information Technology Services
• EPS (TTM): 27.32
• Shares Outstanding: 3,059,000
• 10 Day Avg. Volume: 2,840
• 30 Day Avg. Volume: 4,726
• PEG Ratio: 1.77
• Price to Book (P/B): 1.76
• Price to Sales (P/S): 0.40
• P/FCF Ratio: 13.92
• 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: 79 Outperform
• Price Target: ¥1,116.00 ▲(16.61% Upside)

The score is driven primarily by strong financial performance—especially the zero-debt, strengthening balance sheet—alongside stable profitability. Technicals add support with positive momentum and price above key moving averages. Valuation is also favorable with a low P/E and a solid dividend yield, partially offset by slowing revenue growth and uneven cash-flow consistency.

Positive Factors

Conservative balance sheet (zero debt)

Zero net debt and rising equity materially strengthen financial flexibility and lower solvency risk. This conservatism supports capital allocation for R&D, M&A or dividends during downturns, and with mid‑teens ROE the company retains capacity to deploy capital efficiently over the medium term.

Diversified recurring revenue streams

Mix of product sales, licensing, subscriptions and consulting creates recurring and sticky revenue, improving predictability. Subscription and maintenance contracts support long-term cash flow visibility while consulting and integration services enable cross-sell and higher margin upsell opportunities over time.

Improving operating cash flow in 2025

A rebound to positive operating cash flow and FCF in 2025 signals stronger cash conversion and internal funding capacity. Sustained FCF enables reinvestment in products, supports dividends or buybacks, and reduces reliance on external financing, bolstering long‑term financial resilience.

Negative Factors

Sharply slowing revenue growth

A notable deceleration in topline growth reduces long‑term earnings momentum and increases pressure to extract margin or find new market channels. For a technology services firm, slowing sales may reflect market saturation or competition, limiting upside from current product portfolios.

Volatile free cash flow

Inconsistent FCF undermines planning for capex, dividends and strategic investments. Even with positive 2025 cash generation, historical swings signal execution or working‑capital sensitivity, raising the likelihood of episodic funding needs despite a clean balance sheet.

Modest, stagnant margins

Relatively low and flat margins constrain the firm's ability to convert revenue into durable profitability and FCF. Limited margin expansion reduces returns on incremental sales, making it harder to fund growth initiatives or absorb pricing pressure in competitive IT services markets over the medium term.

D.I.System Co.,Ltd. Business Overview & Revenue Model

Company Description

D. I. System Co., Ltd. engages in the system integration, education, and security solutions businesses in Japan and internationally. It offers system development, network and platform construction, Microsoft, enhanced security, sales/service outsourcing, IT education/qualification acquisition, stress check services, and telework promotion services. The company also provides e-learning system, framework and workflow, Web performer, and targeted mail training services. In addition, it designs and develops business applications to customer operations, such as sales management, customer management, purchasing management, and production management. Further, the company provides infrastructure system design and construction work; and operation and maintenance of business applications and infrastructure systems, such as system operation monitoring, data input and analysis, maintenance development, and equipment maintenance. Additionally, it offers education services, which includes IT training planning and consulting, training program development, and training services; user support services; and develops, sells, installs, and maintains security products that collect logs of server and database operations. The company was incorporated in 1997 and is headquartered in Tokyo, Japan.

How the Company Makes Money

D.I.System Co., Ltd. generates revenue through multiple streams, including direct sales of its software products, licensing agreements, and subscription-based models for its cloud services. The company also earns income from consulting services related to system integration and implementation of its solutions, which often includes ongoing support and maintenance contracts. Significant partnerships with other technology firms and industry players enhance its market reach and contribute to its earnings by enabling collaborative projects and bundled service offerings.

D.I.System Co.,Ltd. Financial Statement Overview

Summary

Strong overall fundamentals supported by a very conservative balance sheet (debt reduced to zero) and steady profitability. Offsetting factors are sharply slowing revenue growth in 2025 and volatile free cash flow year-to-year despite a rebound in 2025.

Income Statement

Revenue has expanded steadily over the last several years, reaching 7.22B in 2025 (annual), supported by generally stable profitability. Gross margin has hovered around ~20% and operating profitability remains solid (2025 operating margin ~5.0%; EBITDA margin ~5.9%). Net margin is consistent in the mid-3% range, but not improving much, and 2025 revenue growth slowed sharply versus prior years—suggesting growth momentum may be moderating.

Balance Sheet

The balance sheet is conservatively positioned with very low leverage and debt reduced to zero in 2025 (annual), down from modest levels in prior years. Equity has grown consistently (to 1.64B in 2025), supporting a stronger capital base. Returns on equity are healthy (mid-teens in 2025), though they have eased from earlier peaks, indicating profitability is solid but not accelerating.

Cash Flow

Cash generation is positive, with operating cash flow and free cash flow improving in 2025 (annual) versus 2024 (operating cash flow 299M; free cash flow 206M). Free cash flow has generally covered a meaningful portion of earnings (roughly two-thirds to near full coverage across most years), but it has been volatile (notably a sharp decline in 2024 and rebound in 2025). This variability reduces confidence in the stability of cash conversion despite the upward trend in the latest year.

Breakdown	TTM	Dec 2025	Dec 2024	Dec 2023	Dec 2022	Dec 2021
Income Statement
Total Revenue	7.09B	7.22B	6.83B	6.24B	5.50B	4.66B
Gross Profit	1.42B	1.47B	1.34B	1.33B	1.18B	939.49M
EBITDA	393.62M	428.34M	403.59M	396.77M	331.06M	242.15M
Net Income	234.80M	256.23M	241.78M	240.98M	194.93M	149.23M
Balance Sheet
Total Assets	3.18B	3.11B	2.89B	2.77B	2.46B	2.06B
Cash, Cash Equivalents and Short-Term Investments	1.08B	1.02B	1.07B	1.10B	900.92M	888.42M
Total Debt	8.46M	0.00	58.43M	125.05M	191.67M	0.00
Total Liabilities	1.64B	1.47B	1.45B	1.51B	1.40B	1.00B
Stockholders Equity	1.54B	1.64B	1.44B	1.26B	1.06B	1.02B
Cash Flow
Free Cash Flow	0.00	206.40M	115.50M	314.27M	185.79M	171.71M
Operating Cash Flow	0.00	299.04M	173.77M	323.86M	190.38M	191.55M
Investing Cash Flow	0.00	-217.36M	-74.90M	-10.91M	-69.99M	-19.41M
Financing Cash Flow	0.00	-130.63M	-130.54M	-109.63M	-107.89M	-45.71M

D.I.System Co.,Ltd. Technical Analysis

• Technical Analysis Sentiment: Neutral
• Last Price: 957.00
• 50DMA: Positive
• 100DMA: Negative
• 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:4421, the sentiment is Neutral. The current price of 957 is below the 20-day moving average (MA) of 972.85, above the 50-day MA of 944.44, and above the 200-day MA of 938.34, indicating a neutral trend. The MACD of 3.83 indicates Positive momentum. The RSI at 47.82 is Neutral, neither overbought nor oversold. The STOCH value of 23.80 is Neutral, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Neutral sentiment for JP:4421.

D.I.System Co.,Ltd. Peers Comparison

Name	Overall Rating	Market Cap	P/E Ratio	ROE	Dividend Yield	Revenue Growth	EPS Growth
4421	79 Outperform	¥2.94B	10.89	―	2.86%	5.74%	5.97%
2323	78 Outperform	¥9.65B	37.92	―	―	103.49%	620.98%
7046	66 Neutral	¥3.09B	22.06	―	0.69%	12.15%	-33.34%
3970	66 Neutral	¥2.56B	-11.15	―	4.29%	15.64%	-268.60%
Sector *	61 Neutral	$37.18B	12.37	-10.20%	1.83%	8.50%	-7.62%
5618	46 Neutral	¥2.65B	-9.17	―	―	23.63%	64.65%
4427	39 Underperform	¥2.65B	161.36	―	―	-12.77%	―

D.I.System Co.,Ltd. Corporate Events

D.I.System Co., Ltd. Reports Increased Sales and Stronger Financial Position

D.I.System Co., Ltd. reported a 5.7% increase in net sales for the fiscal year ending September 30, 2025, reaching 7,222 million yen. The company also saw improvements in operating and ordinary profit, with a notable increase in comprehensive income by 11.7%. The equity ratio improved to 52.6%, reflecting a stronger financial position. The company announced a dividend increase to 27 yen per share, indicating confidence in future growth. The forecast for the next fiscal year anticipates a 10.1% rise in net sales, though a slight decline in profit attributable to owners of the parent is expected.

The most recent analyst rating on (JP:4421) stock is a Buy with a Yen1073.00 price target. To see the full list of analyst forecasts on D.I.System Co.,Ltd. stock, see the JP:4421 Stock Forecast page.