Vario Secure, Inc. (4494) AI Stock Analysis

• Market Cap: ¥3.44B
• Dividend Yield: N/A
• Average Volume (3M): 37.56K
• Price to Earnings (P/E): 9.2
• Beta (1Y): 0.63
• Revenue Growth: 1.62%
• EPS Growth: 9.93%
• Country: JP
• Employees: 74
• Sector: Technology
• Sector Strength: 88
• Industry: Software - Infrastructure
• EPS (TTM): 16.93
• Shares Outstanding: 4,522,961
• 10 Day Avg. Volume: 19,420
• 30 Day Avg. Volume: 37,556
• PEG Ratio: -4.63
• Price to Book (P/B): 0.43
• Price to Sales (P/S): 0.96
• P/FCF Ratio: 8.54
• 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: 75 Outperform
• Price Target: ¥921.00 ▲(23.96% Upside)

The score is driven primarily by strengthening financial fundamentals (accelerating growth and improved leverage) despite margin compression and some cash-conversion variability. Technicals are supportive but appear overbought, adding near-term pullback risk. Valuation is a positive contributor due to the low P/E.

Positive Factors

Accelerating Revenue Growth

Sustained acceleration in TTM revenue indicates strengthening product adoption and market traction. A larger, growing top line provides a more durable base for scaling margins, funding R&D and sales investments, and supports multi-quarter strategic initiatives versus stagnation.

Strong Free Cash Flow

Robust free cash flow and FCF close to net income signal high earnings quality and repeatable cash generation. This underpins long-term flexibility for capex, product development, dividends or M&A, reducing reliance on external financing for strategic growth.

Conservative, Improving Leverage

Material reduction in leverage meaningfully lowers financial risk and increases capacity to invest or withstand cyclical downturns. A conservative capital structure improves credit flexibility and enables opportunistic M&A or reinvestment without jeopardizing balance-sheet stability.

Negative Factors

Margin Compression

Persistent decline from prior peak margins signals structural pressure on profitability—whether from pricing, cost inflation or product mix shifts. Lower steady-state margins reduce free cash flow potential per revenue and constrain long-term returns and reinvestment capacity.

Uneven Cash Conversion

Variable operating cash conversion introduces working-capital risk and reduces predictability of available cash for strategic uses. Over time this can force conservative spending, increase short-term financing needs, and complicate planning for sustained investment or buybacks.

Declining ROE / Efficiency

A sustained fall in ROE reflects reduced capital efficiency and weaker returns on shareholder equity. Unless reversed through higher margins or better asset utilization, lower ROE may signal limits to long-term shareholder value creation and could pressure strategic choices.

Vario Secure, Inc. Business Overview & Revenue Model

Company Description

Vario Secure Inc. provides managed security services and network security appliance sales services. The company's managed security services include integrated security equipment and operation and maintenance systems; and integration services, such as design, procurement, installation, and configuration of security equipment. Vario Secure Inc. was founded in 2001 and is headquartered in Tokyo, Japan.

How the Company Makes Money

Vario Secure generates revenue primarily through the sale of its cybersecurity software products and subscription-based services. The company employs a Software as a Service (SaaS) model, allowing clients to access its solutions via a recurring subscription fee. Additionally, Vario Secure offers consulting services for businesses seeking to enhance their cybersecurity posture, which contributes to its revenue. Strategic partnerships with technology providers and systems integrators also play a crucial role in expanding its market reach and driving sales. Furthermore, the company benefits from government contracts and grants aimed at improving national cybersecurity infrastructure, providing an additional revenue stream.

Vario Secure, Inc. Financial Statement Overview

Summary

Revenue growth accelerated sharply in the latest TTM while profitability remains solid (gross margin ~51.6%, EBIT margin ~19.3%). Balance sheet leverage is conservative and improving (debt-to-equity ~0.17). Offsetting strengths are margin compression versus prior peak years and somewhat uneven cash conversion (operating cash flow to net income ~0.74 TTM).

Income Statement

TTM (Trailing-Twelve-Months) revenue is ~2.78B with a sharp acceleration in revenue growth (1.682 vs ~0–3% in recent annual periods). Profitability remains solid with gross margin ~51.6% and operating profitability (EBIT margin ~19.3%, EBITDA margin ~26.7%), supporting a healthy net margin (~13.4%). The main weakness is margin compression versus earlier years (FY2021–FY2022 net margins ~19% and higher operating margins), indicating the business is growing but not at prior peak profitability.

Balance Sheet

Leverage looks conservative and improving: total debt is ~1.05B against equity of ~6.18B, with debt-to-equity at ~0.17 in TTM (Trailing-Twelve-Months), down materially from ~0.57 in FY2021. The company also shows steady, positive shareholder returns (ROE ~6.3% TTM), though ROE has declined from earlier double-digit levels (FY2021–FY2022), suggesting a less efficient earnings profile despite a stronger capital structure.

Cash Flow

Cash generation is positive with TTM (Trailing-Twelve-Months) operating cash flow of ~517M and free cash flow of ~444M, and free cash flow growth is strong (11.327). Free cash flow is reasonably close to net income (free cash flow to net income ~0.86), indicating decent earnings quality. Offsetting this, operating cash flow is not consistently strong relative to profitability (operating cash flow to net income ~0.74 TTM and notably lower in some prior years), pointing to periodic working-capital or cash conversion volatility.

Breakdown	TTM	Dec 2024	Dec 2023	Dec 2022	Dec 2021	Dec 2020
Income Statement
Total Revenue	2.78B	2.67B	2.64B	2.63B	2.57B	2.55B
Gross Profit	1.43B	1.37B	1.46B	1.39B	1.60B	1.56B
EBITDA	741.85M	693.35M	706.05M	758.74M	877.23M	881.99M
Net Income	372.42M	342.23M	347.60M	383.32M	500.48M	491.53M
Balance Sheet
Total Assets	7.78B	7.58B	7.65B	7.83B	7.12B	7.22B
Cash, Cash Equivalents and Short-Term Investments	879.29M	759.91M	822.30M	1.04B	389.85M	593.93M
Total Debt	1.05B	1.17B	1.33B	1.50B	1.82B	2.26B
Total Liabilities	1.60B	1.68B	2.10B	2.45B	2.80B	3.27B
Stockholders Equity	6.18B	5.89B	5.55B	5.38B	4.32B	3.95B
Cash Flow
Free Cash Flow	444.24M	298.96M	241.00M	383.62M	381.92M	412.02M
Operating Cash Flow	517.31M	359.54M	414.90M	522.29M	490.21M	524.23M
Investing Cash Flow	-121.52M	-125.48M	-173.91M	-138.67M	-108.29M	-112.21M
Financing Cash Flow	-296.62M	-296.44M	-458.65M	266.50M	-586.14M	-450.32M

Vario Secure, Inc. Technical Analysis

• Technical Analysis Sentiment: Negative
• Last Price: 743.00
• 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:4494, the sentiment is Negative. The current price of 743 is below the 20-day moving average (MA) of 778.95, below the 50-day MA of 763.46, and below the 200-day MA of 775.61, indicating a bearish trend. The MACD of 0.33 indicates Positive momentum. The RSI at 42.44 is Neutral, neither overbought nor oversold. The STOCH value of 23.48 is Neutral, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Negative sentiment for JP:4494.

Vario Secure, Inc. Peers Comparison

Name	Overall Rating	Market Cap	P/E Ratio	ROE	Dividend Yield	Revenue Growth	EPS Growth
4493	78 Outperform	¥18.09B	26.25	―	0.17%	31.39%	13.12%
4494	75 Outperform	¥3.44B	9.22	―	―	1.62%	9.93%
3914	67 Neutral	¥17.74B	42.61	―	―	3.17%	-16.66%
3695	65 Neutral	¥8.79B	27.66	―	5.22%	26.41%	-20.60%
3042	62 Neutral	¥2.78B	19.11	―	0.58%	25.37%	―
Sector *	61 Neutral	$37.18B	12.37	-10.20%	1.83%	8.50%	-7.62%
4417	60 Neutral	¥45.24B	34.36	―	0.90%	25.06%	37.24%