Natoco Co (4627) AI Stock Analysis

• Market Cap: ¥13.58B
• Dividend Yield: 3.58%
• Average Volume (3M): 2.61K
• Price to Earnings (P/E): 12.5
• Beta (1Y): 0.40
• 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: ¥1,962.00 ▲(26.74% 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

Very strong balance sheet (zero debt)

Zero reported debt and rising equity provide durable solvency and financial flexibility. This conservative capital structure lowers default and refinancing risk, supports sustained dividend capacity or opportunistic M&A, and gives management runway to invest through multi-month business cycles.

Healthy profitability and recent revenue growth

Sustained gross margins near 22% and positive net margins alongside improved earnings indicate the company can convert sales into profits at a structurally viable level. Combined with recent revenue growth, this underpins internal funding for capex/dividends and supports multi-quarter operational stability.

Low market volatility exposure (low beta)

A low beta reflects limited sensitivity to broad market swings, consistent with a defensive or niche specialty-chemicals profile. Lower volatility aids long-term planning, steadier cash flows, and less pressure on management to pursue short-term fixes, benefiting multi-month execution of strategy.

Negative Factors

Volatile and sometimes negative free cash flow

Inconsistent free cash flow and historically negative FCF reduce predictability of internal funding for capex, dividends, or growth initiatives. Weak cash conversion versus net income suggests working-capital swings that can constrain strategic investments and raise financing or timing risk over coming quarters.

Cash conversion weakness: OCF low vs. net income

When operating cash flow lags reported earnings, earnings quality and liquidity are impaired. Persistent gaps force reliance on balance-sheet buffers, limit free cash for reinvestment, and increase sensitivity to adverse demand or input-cost shifts over a multi-month horizon.

Moderate returns on equity and margin erosion

Mid-single-digit ROE and a trend of softer operating/net margins vs prior years point to limited capital efficiency. If cost or pricing pressures persist, the company may struggle to translate asset base into higher shareholder returns, constraining long-term compounding potential.

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 1690.40, below the 50-day MA of 1626.78, and above the 200-day MA of 1526.93, indicating a bullish trend. The MACD of 54.84 indicates Negative momentum. The RSI at 79.92 is Negative, neither overbought nor oversold. The STOCH value of 86.88 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	¥4.40B	12.52	―	2.27%	1.79%	31.63%
4623	72 Outperform	¥6.58B	7.93	―	3.50%	-8.27%	-3.23%
4629	70 Outperform	¥7.82B	8.04	―	2.51%	2.26%	51.04%
4627	68 Neutral	¥13.58B	12.55	―	3.58%	7.33%	18.98%
4624	66 Neutral	¥5.91B	6.39	―	1.39%	2.67%	37.55%
Sector *	62 Neutral	$20.33B	14.63	-3.31%	3.23%	1.93%	-12.26%
4615	44 Neutral	¥4.22B	-15.17	―	―	8.66%	-239.07%