Natoco Co (4627) AI Stock Analysis

• Market Cap: ¥13.37B
• Dividend Yield: 3.58%
• Average Volume (3M): 2.61K
• Price to Earnings (P/E): 12.1
• Beta (1Y): 0.43
• Revenue Growth: 7.33%
• EPS Growth: 18.98%
• Country: JP
• Employees: 415
• Sector: Consumer Defensive
• Sector Strength: 42
• Industry: Chemicals - Specialty
• EPS (TTM): 31.51
• Shares Outstanding: 8,144,400
• 10 Day Avg. Volume: 2,490
• 30 Day Avg. Volume: 2,610
• PEG Ratio: 0.55
• Price to Book (P/B): 0.49
• Price to Sales (P/S): 0.53
• P/FCF Ratio: 9.40
• 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: ¥1,938.00 ▲(25.19% Upside)
• Action: Downgraded Date: 12/30/25
• Date: Action: Downgraded 12/30/25

The score is primarily supported by strong financial stability (notably zero debt) and attractive valuation (low P/E and solid dividend yield). This is tempered by inconsistent free cash flow and mixed/neutral technical signals, including a negative MACD.

Positive Factors

Balance sheet strength

Zero debt and rising equity create durable solvency and financial flexibility. This conservative capital structure reduces refinancing and default risk, supports stable dividend policy or targeted capex, and provides runway to absorb near-term operational shocks over the next 2–6 months.

Profitability and revenue growth

Healthy gross margins and improving earnings with recent revenue growth indicate underlying demand and pricing power in core markets. Sustained profitability supports internal reinvestment and dividends, underpinning operational resilience across the medium term despite past margin volatility.

Consistent operating cash flow

Consistently positive operating cash flow bolsters earnings quality and lowers reliance on external financing. Even if free cash flow swings, steady OCF provides the company with practical liquidity to fund working capital, routine capex and shareholder returns over coming quarters.

Negative Factors

Volatile free cash flow

Historically erratic free cash flow limits the firm's ability to consistently fund growth, dividends or one-off investments without tapping reserves. Over a 2–6 month horizon, unpredictable FCF raises execution risk for strategic initiatives and can force cautious capex or tighter working-capital controls.

Margin erosion

Declining operating and net margins versus prior peaks point to sustained cost pressure or weaker pricing power. Persistent margin compression reduces cash generation and makes profits more sensitive to volume swings and input costs, creating a structural headwind for sustainable earnings.

Modest return on equity

Mid-single-digit ROE signals limited efficiency in converting equity into profits. Even with a clean balance sheet, modest ROE constrains internal capital formation and long-term shareholder value creation, making growth or higher payouts harder to sustain without improving operating returns.

Natoco Co Business Overview & Revenue Model

Company Description

Natoco Co., Ltd. manufactures and sells paints, inks, fine chemicals, synthetic resins, and related products in Japan. The company operates through three segments: Paints, Fine Chemicals, and Distillation Business. It offers manufactures and sells functional resins and coatings agents for resin materials; and recycled solvents. The company was formerly known as Natoco Paint Co., Ltd. and changed its name to Natoco Co., Ltd. in November 1998. Natoco Co., Ltd. was incorporated in 1948 and is headquartered in Miyoshi, Japan.

How the Company Makes Money

Natoco Co. makes money through the manufacturing and sale of its paint and chemical products. The company generates revenue by supplying coatings to various industries such as automotive, construction, and electronics. Key revenue streams include the direct sale of products to manufacturers and distributors, as well as through partnerships with other companies in need of specialized coatings solutions. The company's focus on research and development and its ability to meet diverse industrial needs are significant factors contributing to its earnings.

Natoco Co Financial Statement Overview

Summary

Strong balance sheet strength (zero debt and growing equity) supports a high-quality financial profile, and profitability is healthy with improved earnings versus the prior year. The main offset is cash flow reliability: free cash flow has been volatile and often negative historically, and recent operating cash flow appears low versus net income, indicating weaker cash conversion.

Income Statement

TTM (Trailing-Twelve-Months) results show healthy profitability (about 22% gross margin and ~5% net margin) with improved earnings versus the prior year. Revenue growth is strong in the latest period, but longer-term margin trajectory has softened from earlier peaks (notably lower operating and net margins than 2021–2022), which suggests some pricing/cost pressure and a more normalized earnings profile.

Balance Sheet

Balance sheet quality is a key strength: the company reports zero debt across periods and a steadily growing equity base, indicating conservative financial management and strong solvency. Returns on equity are positive but moderate in the most recent period (mid-single digits), implying that while the capital structure is very safe, overall efficiency in generating profits from equity is not exceptionally high.

Cash Flow

Operating cash flow is consistently positive, which supports earnings quality; however, free cash flow has been volatile and often negative in recent years before turning positive in the latest period. Cash conversion remains a watch item, with operating cash flow relatively low versus net income in the most recent year, suggesting working-capital swings and/or cash demands that can pressure near-term financial flexibility despite strong solvency.

Breakdown	Oct 2025	Oct 2024	Oct 2023	Oct 2022	Oct 2021
Income Statement
Total Revenue	22.28B	20.75B	20.16B	20.45B	19.05B
Gross Profit	4.97B	4.55B	4.49B	4.89B	5.04B
EBITDA	2.30B	2.20B	2.10B	2.84B	2.75B
Net Income	1.14B	955.98M	951.21M	1.51B	1.64B
Balance Sheet
Total Assets	31.03B	29.83B	28.84B	28.22B	26.28B
Cash, Cash Equivalents and Short-Term Investments	11.71B	11.75B	10.27B	9.39B	9.03B
Total Debt	0.00	0.00	0.00	0.00	0.00
Total Liabilities	6.44B	6.26B	6.09B	6.14B	5.69B
Stockholders Equity	24.42B	23.57B	22.75B	22.09B	20.60B
Cash Flow
Free Cash Flow	1.27B	-1.94B	-3.14B	-3.28B	-3.51B
Operating Cash Flow	1.85B	1.59B	1.69B	2.03B	1.90B
Investing Cash Flow	-211.87M	-789.66M	-2.32B	-2.12B	-1.31B
Financing Cash Flow	-398.30M	-413.32M	-383.36M	-414.59M	-384.58M

Natoco Co Technical Analysis

• Technical Analysis Sentiment: Positive
• Last Price: 1548.00
• 50DMA: Positive
• 100DMA: Positive
• 200DMA: Positive
• MACD: Negative
• RSI: Negative
• STOCH: Negative

Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For JP:4627, the sentiment is Positive. The current price of 1548 is below the 20-day moving average (MA) of 1649.30, below the 50-day MA of 1605.70, and above the 200-day MA of 1518.48, indicating a bullish trend. The MACD of 44.92 indicates Negative momentum. The RSI at 78.21 is Negative, neither overbought nor oversold. The STOCH value of 89.07 is Negative, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Positive sentiment for JP:4627.

Natoco Co Peers Comparison

Name	Overall Rating	Market Cap	P/E Ratio	ROE	Dividend Yield	Revenue Growth	EPS Growth
4625	80 Outperform	¥4.52B	13.73	―	2.27%	1.79%	31.63%
4623	72 Outperform	¥6.67B	10.85	―	3.50%	-8.27%	-3.23%
4629	70 Outperform	¥8.05B	9.17	―	2.51%	2.26%	51.04%
4627	68 Neutral	¥13.37B	12.12	―	3.58%	7.33%	18.98%
4624	66 Neutral	¥6.22B	12.02	―	1.39%	2.67%	37.55%
Sector *	62 Neutral	$20.33B	14.63	-3.31%	3.23%	1.93%	-12.26%
4615	44 Neutral	¥4.32B	-10.61	―	―	8.66%	-239.07%