Tsumura & Co (4540) AI Stock Analysis

• Market Cap: ¥312.38B
• Dividend Yield: 3.3%
• Average Volume (3M): 448.06K
• Price to Earnings (P/E): 11.2
• Beta (1Y): 0.54
• Revenue Growth: 10.51%
• EPS Growth: 9.62%
• Country: JP
• Employees: 4,138
• Sector: Healthcare
• Sector Strength: 45
• Industry: Drug Manufacturers - Specialty & Generic
• EPS (TTM): 108.49
• Shares Outstanding: 76,758,360
• 10 Day Avg. Volume: 373,220
• 30 Day Avg. Volume: 448,060
• PEG Ratio: 0.11
• Price to Book (P/B): 1.09
• Price to Sales (P/S): 1.81
• P/FCF Ratio: 52.57
• 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: 76 Outperform
• Price Target: ¥4,730.00 ▲(31.43% Upside)

Tsumura & Co's stock is supported by strong financial performance, particularly in revenue growth and profitability, despite challenges in cash flow management. Technical indicators show a positive price trend, and the stock is attractively valued with a reasonable P/E ratio and a solid dividend yield. These factors contribute to a favorable overall stock score.

Positive Factors

Strong revenue growth & margins

TTM surge in sales combined with durable gross and net margins reflects robust demand for prescription Kampo products and operational efficiency. High margins provide a structural buffer to fund manufacturing quality, medical marketing and product development, supporting sustainable profitability over months.

Prudent balance sheet and low leverage

A low debt-to-equity ratio and strong equity base give the company financial flexibility to invest in raw-material sourcing, manufacturing capacity and R&D without heavy reliance on external financing. This stability helps absorb reimbursement or demand shocks and supports medium-term strategy execution.

Reimbursed prescription business model

Revenue derived from prescription Kampo products reimbursed by Japan's healthcare system creates predictable institutional demand and cashflow visibility. Strong relationships with physicians, wholesalers and quality-controlled manufacturing raise barriers to entry and underpin steady mid-term revenue.

Negative Factors

Weak free cash flow conversion

Negative free cash flow despite accounting profits indicates earnings are not fully converting to cash. This limits the firm's ability to self-fund capex, R&D or dividends, increasing dependence on external financing or asset adjustments and reducing resilience to shocks over the medium term.

Margin pressure and slightly lower ROE

A declining ROE alongside contracting gross margins suggests emerging cost pressure—likely from raw materials or production. If sustained, margin erosion will weaken returns on invested capital, constrain reinvestment capacity and hamper the company’s ability to expand profitably in the coming months.

Concentrated domestic market exposure

Heavy dependence on the Japanese market and its reimbursement framework concentrates regulatory, pricing and demographic risk. Limited geographic diversification narrows growth opportunities and makes revenue sensitive to local policy shifts or changes in physician prescribing behavior over the medium term.

Tsumura & Co Business Overview & Revenue Model

Company Description

Tsumura & Co. (4540) is a leading Japanese pharmaceutical company specializing in traditional herbal medicine, also known as Kampo medicine. Established in 1893, the company develops, manufactures, and sells a wide range of Kampo products, which are derived from natural herbal ingredients. Tsumura operates primarily in the healthcare sector, focusing on providing effective and safe therapeutic solutions that align with Japan's rich history of herbal medicine. In addition to Kampo formulations, the company is involved in research and development of new pharmaceuticals and operates in the field of health foods.

How the Company Makes Money

Tsumura & Co. generates revenue primarily through the sale of its Kampo herbal medicines, which are prescribed by healthcare professionals in Japan and increasingly recognized in international markets. The company benefits from a strong distribution network and partnerships with pharmacies and medical institutions. In addition to direct sales, Tsumura earns revenue from licensing agreements and collaborations with other pharmaceutical companies for the development of new drugs based on its proprietary herbal formulations. The growing global interest in natural and alternative medicine has also contributed positively to its revenue streams, alongside ongoing investments in research and development to innovate and expand its product offerings.

Tsumura & Co Financial Statement Overview

Summary

Tsumura & Co exhibits strong revenue growth and profitability, supported by efficient operations and a stable balance sheet. However, cash flow management poses a risk, with negative free cash flow and declining cash flow ratios. The company should focus on improving cash generation to sustain its growth trajectory and financial health.

Income Statement

Tsumura & Co demonstrates strong profitability with a consistent gross profit margin around 48% to 50% and a net profit margin of approximately 15% in the TTM. The company has shown impressive revenue growth, particularly in the TTM period with a growth rate of 78.8%, indicating robust market demand and effective sales strategies. EBIT and EBITDA margins are also healthy, reflecting efficient operational management. However, the slight decline in gross profit margin from the previous annual report suggests potential cost pressures.

Balance Sheet

The balance sheet of Tsumura & Co is stable with a moderate debt-to-equity ratio of 0.39 in the TTM, indicating prudent financial leverage. The equity ratio remains strong, suggesting a solid capital structure. Return on equity has slightly decreased in the TTM, reflecting a minor decline in profitability relative to equity. Overall, the company's balance sheet reflects financial stability with manageable debt levels.

Cash Flow

Cash flow analysis reveals challenges, with a negative free cash flow in the TTM and a significant decline in free cash flow growth. The operating cash flow to net income ratio is relatively low, indicating potential issues in converting income into cash. The negative free cash flow to net income ratio further highlights cash flow management concerns. Despite these challenges, the company maintains positive operating cash flow, suggesting some resilience in core operations.

Breakdown	TTM	Dec 2025	Dec 2024	Dec 2023	Dec 2022	Dec 2021
Income Statement
Total Revenue	181.92B	181.09B	150.84B	140.04B	129.55B	130.88B
Gross Profit	88.19B	90.58B	68.82B	68.28B	66.47B	74.93B
EBITDA	56.11B	57.25B	34.82B	33.89B	31.57B	28.00B
Net Income	27.40B	32.43B	16.71B	16.48B	18.84B	15.33B
Balance Sheet
Total Assets	516.49B	464.38B	428.25B	396.81B	350.98B	319.06B
Cash, Cash Equivalents and Short-Term Investments	73.20B	73.23B	78.08B	94.75B	67.55B	61.31B
Total Debt	114.90B	70.34B	79.69B	79.69B	49.69B	52.85B
Total Liabilities	190.00B	134.27B	132.89B	124.57B	92.87B	85.89B
Stockholders Equity	294.07B	300.53B	270.80B	252.04B	239.77B	217.78B
Cash Flow
Free Cash Flow	-1.89B	6.23B	-14.45B	1.74B	10.73B	6.69B
Operating Cash Flow	26.64B	33.82B	5.61B	16.45B	21.31B	16.10B
Investing Cash Flow	-38.12B	-24.97B	-19.35B	-15.49B	-9.11B	-7.35B
Financing Cash Flow	8.69B	-19.87B	-4.42B	24.42B	-8.18B	-10.43B

Tsumura & Co Technical Analysis

• Technical Analysis Sentiment: Positive
• Last Price: 3599.00
• 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:4540, the sentiment is Positive. The current price of 3599 is below the 20-day moving average (MA) of 4132.50, below the 50-day MA of 4021.76, and below the 200-day MA of 3720.27, indicating a neutral trend. The MACD of 5.44 indicates Positive momentum. The RSI at 50.01 is Neutral, neither overbought nor oversold. The STOCH value of 32.05 is Neutral, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Positive sentiment for JP:4540.

Tsumura & Co Peers Comparison

Name	Overall Rating	Market Cap	P/E Ratio	ROE	Dividend Yield	Revenue Growth	EPS Growth
4540	76 Outperform	¥312.38B	11.22	9.05%	3.30%	10.51%	9.62%
4530	73 Outperform	¥464.19B	22.99	7.11%	2.43%	3.53%	38.23%
4569	69 Neutral	¥85.28B	9.98	―	3.36%	11.65%	93.46%
4547	66 Neutral	¥187.89B	13.63	6.57%	2.48%	13.11%	41.57%
4506	58 Neutral	¥912.58B	8.29	79.99%	―	29.92%	―
Sector *	51 Neutral	$7.86B	-0.30	-43.30%	2.27%	22.53%	-2.21%

Tsumura & Co Corporate Events

Tsumura Secures ¥50 Billion Syndicated Loan with Financial Covenants for Growth Investment

Tsumura & Co. has entered into a large unsecured syndicated loan agreement with a bank group led by MUFG Bank to finance active investment in equipment and business initiatives tied to its long-term management vision, including sustaining growth in its domestic operations and expanding its presence in China. The agreement, split into two tranches totaling ¥50 billion and maturing in 2033 and 2036, includes financial covenants requiring the company to maintain at least 75% of specified consolidated net asset levels and to avoid recording operating losses for two consecutive fiscal years, underscoring both the lender’s risk controls and the company’s commitment to financial discipline, although Tsumura says the deal will have no material impact on its current earnings outlook.

The most recent analyst rating on (JP:4540) stock is a Hold with a Yen4226.00 price target. To see the full list of analyst forecasts on Tsumura & Co stock, see the JP:4540 Stock Forecast page.

Tsumura Completes Acquisition of Shanghai Hongqiao Stake

Tsumura & Co. has completed the acquisition of a 51% stake in Shanghai Hongqiao Traditional Chinese Drug Pieces Co., Ltd., a company specializing in pharmaceutical production and traditional Chinese medicine services. This acquisition is expected to be reflected in Tsumura’s financial statements from the mid-term period of the fiscal year ending March 2026, potentially impacting the company’s earnings and dividend forecasts.

The most recent analyst rating on (JP:4540) stock is a Hold with a Yen3870.00 price target. To see the full list of analyst forecasts on Tsumura & Co stock, see the JP:4540 Stock Forecast page.

Tsumura & Co. Revises Medium-Term Plan with Higher Profit Targets

Tsumura & Co. has revised its Medium-Term Management Plan for FY2025-FY2027, increasing its operating profit and ROE targets due to better-than-expected business performance. The upward revision is driven by the consolidation of Shanghai Hongqiao Traditional Chinese Drug Pieces Co., Ltd., cost reductions, and effective expense management, positioning the company for improved financial outcomes despite inflationary pressures.

The most recent analyst rating on (JP:4540) stock is a Hold with a Yen3870.00 price target. To see the full list of analyst forecasts on Tsumura & Co stock, see the JP:4540 Stock Forecast page.

Tsumura & Co. Revises Earnings and Dividend Forecasts for FY 2026

Tsumura & Co. has revised its earnings and dividend forecasts for the fiscal year ending March 31, 2026, due to recent performance trends and strategic acquisitions. The company expects a 5.3% increase in net sales, primarily driven by the consolidation of Shanghai Hongqiao Traditional Chinese Drug Pieces Co., Ltd. Although operating profit is projected to rise by 49.8%, the impact of the acquisition is expected to be minor due to associated costs. The company has also increased its annual dividend forecast by 8 yen per share, reflecting improved profitability and a commitment to shareholder returns.

The most recent analyst rating on (JP:4540) stock is a Hold with a Yen3870.00 price target. To see the full list of analyst forecasts on Tsumura & Co stock, see the JP:4540 Stock Forecast page.

Tsumura & Co. Reports Mixed Financial Results Amid Strategic Adjustments

Tsumura & Co. reported a slight increase in net sales for the six months ending September 30, 2025, but experienced significant declines in operating and ordinary profits compared to the previous year. Despite these challenges, the company has revised its dividend forecast upwards, indicating confidence in future performance. The financial results reflect a challenging period with decreased profitability, yet the company’s strategic adjustments, including dividend revisions, suggest a focus on long-term stability and growth.

The most recent analyst rating on (JP:4540) stock is a Hold with a Yen3870.00 price target. To see the full list of analyst forecasts on Tsumura & Co stock, see the JP:4540 Stock Forecast page.