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Tsumura & Co. (JP:4540)
:4540

Tsumura & Co (4540) AI Stock Analysis

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JP:4540

Tsumura & Co

(4540)

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Neutral 69 (OpenAI - 5.2)
Rating:69Neutral
Price Target:
¥4,595.00
▲(27.67% Upside)
Action:DowngradedDate:02/08/26
The score is held back primarily by weak TTM cash generation (negative free cash flow) and higher leverage versus FY2025. Offsetting these risks are solid profitability, a constructive technical uptrend with positive momentum, and supportive valuation with a low P/E and a healthy dividend yield.
Positive Factors
High Profitability and Margins
Sustained high gross and healthy net margins reflect durable product economics in Kampo formulations. Strong margins provide structural capacity to fund R&D, maintain manufacturing quality and support pricing flexibility versus peers, underpinning long-term operating resilience.
Consistent Multi‑year Revenue Growth
Multi-year top-line expansion demonstrates persistent demand for prescription Kampo products and successful market penetration. Consistent revenue growth supports scale advantages in manufacturing and distribution, reducing unit costs and reinforcing long-term market position.
Reimbursed Prescription Business Model
Earnings driven by reimbursed prescription products creates a structurally sticky revenue base tied to healthcare reimbursement and physician prescribing. This model yields predictable demand, high barriers to entry, and stable channel relationships that persist across economic cycles.
Negative Factors
Negative Free Cash Flow
A sustained swing to materially negative free cash flow increases reliance on external financing and raises execution risk for capex or acquisitions. Weak cash conversion constrains flexibility to self-fund growth, dividends or margin-enhancing investments over the medium term.
Rising Leverage
A marked increase in debt reduces financial headroom and raises interest and refinancing exposure. Higher leverage limits optionality for strategic moves and amplifies downside in earnings shocks, making capital allocation and long-term stability more sensitive to cash‑flow variability.
Eroding Profitability Metrics
Declining margins and a step‑down in ROE suggest rising cost pressure or mix shifts that weaken earnings quality. If persistent, this trend can limit reinvestment returns and make it harder to translate revenue growth into shareholder value over multiple reporting periods.

Tsumura & Co (4540) vs. iShares MSCI Japan ETF (EWJ)

Tsumura & Co Business Overview & Revenue Model

Company DescriptionTsumura & 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 MoneyTsumura & 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
Strong profitability and steady multi-year revenue growth are positives, but the TTM cash flow profile is a major risk: operating cash flow is low versus earnings and free cash flow is negative. Balance sheet leverage has also risen versus FY2025, reducing the overall financial strength score despite solid margins.
Income Statement
78
Positive
Profitability is strong, with TTM (Trailing-Twelve-Months) gross margin ~47.6% and net margin ~15.3%, supported by solid operating profitability. Growth has been steady to improving: revenue expanded from ¥129.5B (2022) to ¥181.1B (FY2025), and TTM revenue growth remains positive (~4.2%). The main weakness is that margins have softened versus FY2025 (net margin ~17.9% then vs ~15.3% TTM), indicating some recent pressure on earnings quality/trajectory despite higher sales.
Balance Sheet
64
Positive
Equity remains substantial (TTM equity ~¥305.3B) and leverage is still moderate (TTM debt-to-equity ~0.44), but the balance sheet has clearly levered up versus FY2025 (debt-to-equity ~0.23; total debt rose sharply to ~¥135.4B TTM). Returns on shareholders’ capital are acceptable but not exceptional (ROE ~9.3% TTM, down from ~10.8% in FY2025), suggesting incremental debt has not translated into stronger shareholder returns.
Cash Flow
38
Negative
Cash generation has become the key concern. TTM (Trailing-Twelve-Months) operating cash flow is low (~¥15.4B) relative to earnings, and free cash flow is negative (~-¥22.0B), implying elevated investment needs and/or working-capital drag. While FY2025 showed healthier cash conversion (positive free cash flow ~¥6.2B), the swing back to negative free cash flow TTM increases financing dependence and adds volatility risk despite strong reported profitability.
BreakdownTTMMar 2026Mar 2025Mar 2024Mar 2023Mar 2022
Income Statement
Total Revenue189.50B181.09B150.84B140.04B129.55B130.88B
Gross Profit90.20B90.58B68.82B68.28B66.47B74.93B
EBITDA54.61B57.25B34.82B33.89B31.57B28.00B
Net Income29.01B32.43B16.71B16.48B18.84B15.33B
Balance Sheet
Total Assets549.68B464.38B428.25B396.81B350.98B319.06B
Cash, Cash Equivalents and Short-Term Investments69.48B73.23B78.08B94.75B67.55B61.31B
Total Debt135.41B70.34B79.69B79.69B49.69B52.85B
Total Liabilities211.04B134.27B132.89B124.57B92.87B85.89B
Stockholders Equity305.33B300.53B270.80B252.04B239.77B217.78B
Cash Flow
Free Cash Flow-21.99B6.23B-14.45B1.74B10.73B6.69B
Operating Cash Flow15.40B33.82B5.61B16.45B21.31B16.10B
Investing Cash Flow-46.44B-24.97B-19.35B-15.49B-9.11B-7.35B
Financing Cash Flow20.41B-19.87B-4.42B24.42B-8.18B-10.43B

Tsumura & Co Technical Analysis

Technical Analysis Sentiment
Positive
Last Price3599.00
Price Trends
50DMA
4108.80
Positive
100DMA
3920.11
Positive
200DMA
3710.55
Positive
Market Momentum
MACD
1.31
Negative
RSI
55.15
Neutral
STOCH
77.11
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 4090.25, below the 50-day MA of 4108.80, and below the 200-day MA of 3710.55, indicating a bullish trend. The MACD of 1.31 indicates Negative momentum. The RSI at 55.15 is Neutral, neither overbought nor oversold. The STOCH value of 77.11 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

Overall Rating
UnderperformOutperform
Sector (51)
Financial Indicators
Name
Overall Rating
Market Cap
P/E Ratio
ROE
Dividend Yield
Revenue Growth
EPS Growth
80
Outperform
¥159.74B-44.660.44%4.16%-5.99%-96.04%
77
Outperform
¥346.47B11.612.12%4.07%22.59%
73
Outperform
¥439.97B21.797.11%2.43%3.53%38.23%
73
Outperform
¥134.92B21.895.11%2.34%4.35%48.30%
69
Neutral
¥320.57B10.819.05%3.30%10.51%9.62%
51
Neutral
$7.86B-0.30-43.30%2.27%22.53%-2.21%
47
Neutral
¥18.69B-9.943.65%9.53%-155.76%
* Healthcare Sector Average
Performance Comparison
Ticker
Company Name
Price
Change
% Change
JP:4540
Tsumura & Co
4,190.00
34.02
0.82%
JP:4530
Hisamitsu Pharmaceutical Co
6,030.00
1,884.79
45.47%
JP:4521
Kaken Pharmaceutical Co
4,435.00
7.17
0.16%
JP:4534
Mochida Pharmaceutical Co., Ltd.
3,965.00
855.51
27.51%
JP:2929
Pharma Foods International Co., Ltd.
645.00
-200.35
-23.70%
JP:4516
Nippon Shinyaku Co., Ltd.
5,144.00
1,201.83
30.49%

Tsumura & Co Corporate Events

Tsumura Updates Q3 FY2026 Results and Expands Consolidation of Chinese Herbal Subsidiary
Feb 6, 2026

Tsumura & Co. released supplementary materials for the third quarter of the fiscal year ending March 31, 2026, detailing consolidated financial statements, sales by business and product group, and quarterly performance data, with a particular focus on the sales and growth of 129 prescription Kampo formulations. The company also announced changes in its consolidation scope and reporting format, notably shifting to consolidate first the balance sheet and now, from the third quarter, the income statement of its Shanghai Hongqiao traditional Chinese drug pieces subsidiary, a move that is likely to provide a more complete view of the group’s financial position and performance and may underscore the growing strategic importance of its Chinese herbal medicine operations within the overall business.

The most recent analyst rating on (JP:4540) stock is a Hold with a Yen4584.00 price target. To see the full list of analyst forecasts on Tsumura & Co stock, see the JP:4540 Stock Forecast page.

Tsumura Posts Higher Sales but Lower Profits, Keeps Full-Year Forecast and Dividend Plan Intact
Feb 6, 2026

Tsumura & Co. reported consolidated net sales of ¥145.2 billion for the first nine months of the fiscal year ending March 31, 2026, a 6.1% year-on-year increase, but saw declines in profitability, with operating profit down 10.9%, ordinary profit down 9.2%, and profit attributable to owners of parent falling 12.9% to ¥23.2 billion; basic earnings per share dropped to ¥309.60 and the equity ratio weakened to 55.5% as total assets expanded. Despite the profit pressures, the company maintained its dividend policy with an interim payout of ¥68 per share and is forecasting a slight increase in the full-year dividend to ¥144 per share, while keeping its full-year guidance unchanged at ¥198.0 billion in net sales and a 25.1% decline in profit attributable to owners of parent, signaling a cautious stance amid rising costs or other margin challenges but continued commitment to shareholder returns.

The most recent analyst rating on (JP:4540) stock is a Hold with a Yen4584.00 price target. To see the full list of analyst forecasts on Tsumura & Co stock, see the JP:4540 Stock Forecast page.

Tsumura Confirms It Is Weighing Reported Yomeishu Take-Private but Says No Decision Yet
Feb 3, 2026

Tsumura & Co. clarified that recent reports in the digital and print editions of The Nikkei about its involvement in a potential take-private transaction for Yomeishu Seizo Co., Ltd. did not originate from the company itself. The company acknowledged that it is considering the reported matters but emphasized that no decisions have been made, and it pledged to disclose any material developments in a timely and appropriate manner, signaling that discussions remain at a preliminary stage and that stakeholders should not assume a finalized deal.

The most recent analyst rating on (JP:4540) stock is a Hold with a Yen4584.00 price target. To see the full list of analyst forecasts on Tsumura & Co stock, see the JP:4540 Stock Forecast page.

Tsumura Secures ¥50 Billion Syndicated Loan with Financial Covenants for Growth Investment
Jan 16, 2026

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
Nov 10, 2025

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
Nov 10, 2025

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
Nov 10, 2025

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
Nov 10, 2025

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.

Glossary
BuyA stock rated as a "Buy" is expected to perform better than the overall market or a specific benchmark over the near-to-medium term. This rating suggests the stock is likely to deliver higher returns compared to other stocks in the same sector or market index. Note: This is not investment advice; please consult a financial advisor before making investment decisions.
HoldA stock rated as a "Hold" is expected to perform in line with the overall market or a specific benchmark. This rating indicates that the stock is neither particularly compelling nor unfavorable for investment. Note: This is not investment advice; please consult a financial advisor before making investment decisions.
SellA stock rated as a "Sell" is expected to perform worse than the overall market or a specific benchmark over the near-to-medium term. This rating suggests the stock may deliver lower returns compared to other stocks in the same sector or market index. Note: This is not investment advice; please consult a financial advisor before making investment decisions.

Disclaimer

This AI Analyst Stock Report is automatically generated by our AI systems using advanced algorithms and publicly available financial, technical, and market data. While the information provided aims to be accurate and insightful, it is intended for informational purposes only and should not be considered financial advice. Any content created by an AI (Artificial Intelligence) system may contain inaccuracies and/or contain errors. Investing in stocks carries inherent risks, and past performance is not indicative of future results. This report does not account for your personal financial circumstances, objectives, or risk tolerance. Always conduct your own research or consult with a qualified financial advisor before making investment decisions. The analysis and recommendations provided are based on historical and current data and may not fully reflect future market conditions or unexpected developments. Neither the creators of this report nor its affiliated entities guarantee the accuracy, completeness, or reliability of the information presented. Use this report at your own discretion and risk.Date of analysis: Feb 08, 2026