LY Corporation (4689) AI Stock Analysis

• Market Cap: ¥2.60T
• Dividend Yield: 1.69%
• Average Volume (3M): 15.02M
• Price to Earnings (P/E): 12.9
• Beta (1Y): 0.19
• Revenue Growth: 6.39%
• EPS Growth: 105.16%
• Country: JP
• Employees: 28,196
• Sector: Consumer Cyclical
• Sector Strength: 84
• Industry: Internet Content & Information
• EPS (TTM): 6.61
• Shares Outstanding: 6,883,396,500
• 10 Day Avg. Volume: 17,618,049
• 30 Day Avg. Volume: 15,020,503
• PEG Ratio: 0.62
• Price to Book (P/B): 1.23
• Price to Sales (P/S): 1.93
• P/FCF Ratio: 8.81
• 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): 25.76
• Revenue Forecast (FY): ¥2.02T

• Rating: 66 Neutral
• Price Target: ¥410.00 ▼(-1.73% Downside)
• Action: Reiterated Date: 02/06/26
• Date: Action: Reiterated 02/06/26

The score is driven primarily by solid profitability and strong free-cash-flow generation, supported by reasonable valuation. Offsetting these are weak recent revenue performance and a technically mixed setup with negative MACD and the stock below key longer-term moving averages; earnings call guidance and ex-ASKUL momentum provide a meaningful positive counterbalance.

Positive Factors

Free Cash Flow Strength

Consistently strong operating and free cash flow, with FCF growth near 31% TTM, provides durable internal funding for R&D, capex and debt reduction. This cash-generation base supports strategic investments and financial flexibility even if top-line recovery is gradual.

High Profitability Margins

Very high gross margins and healthy operating margins reflect differentiated products and pricing power across components and services. Sustained margin levels give the company room to invest in growth initiatives and absorb cyclical revenue pressures without immediate margin erosion.

Underlying Segment Growth & Ecosystem

Robust commerce and strategic segment expansion, plus product ecosystem builds (Official Accounts, MINI Apps, SaaS and acquisitions like Toreta), indicate structural revenue diversification and higher ARPU potential, supporting sustainable medium‑term earnings growth independent of one-off shocks.

Negative Factors

ASKUL Ransomware Risk

The ASKUL ransomware outage is a structural operational risk that reduced consolidated results and creates uncertainty about recovery timing, remediation costs, and customer confidence. Persistent service interruptions or recovery delays could impair revenue and margin recovery for several quarters.

Recent Revenue Contraction

A steep TTM revenue decline weakens the firm's growth runway and can erode scale economics. Even with strong margins and cash flow, prolonged top‑line contraction limits reinvestment capacity, pressures future margin expansion, and raises reliance on a few high‑growth segments to restore overall growth.

Media Ad Weakness & AI Monetization Nascent

Softer search and ad demand in Media and immature AI monetization translate into constrained near‑term revenue upside from a core business line. If ad recovery lags and AI monetization timelines slip, overall company growth and margin targets could be harder to achieve without offsetting gains elsewhere.

LY Corporation Business Overview & Revenue Model

Company Description

LY Corp. engages in the management of group companies and related operations. It operates through the following segments: Media and Commerce. The Media segment covers the advertisement related services that include search linked advertisement and display advertisement. The Commerce segment handles the commerce related services in Yahoo Auction!, Yahoo! Shopping, ASKUL Corp., and Yahoo! Premium. It also provides the settlement finance related services. The company was founded on January 31, 1996 and is headquartered in Tokyo, Japan.

How the Company Makes Money

LY Corporation generates revenue through multiple streams, primarily by selling its electronic components and systems to various industries, including telecommunications, automotive, and consumer electronics. The company benefits from long-term contracts with major manufacturers, ensuring a steady flow of income. Additionally, LY Corporation engages in research and development partnerships that enhance its product offerings and market reach. The company also capitalizes on emerging technologies, such as IoT and smart devices, which have increased demand for its products, thereby contributing significantly to its overall earnings.

LY Corporation Financial Statement Overview

Summary

Strong profitability (gross margin ~72.8%, EBIT margin ~16.7%) and solid cash generation (TTM FCF ~¥579B; FCF growth ~31%) support the score. The key offset is the sharp TTM revenue decline (-17.5%) alongside a noted step-up in debt, which raises risk if growth does not re-accelerate.

Income Statement

TTM (Trailing-Twelve-Months) profitability is solid, with a strong gross margin (~72.8%) and healthy operating profitability (EBIT margin ~16.7%; EBITDA margin ~25.0%). Net margin is also respectable (~10.3%). The key weakness is growth: TTM revenue declined sharply (-17.5%), despite prior years showing positive growth, creating a mixed trajectory and raising questions about near-term demand or competitive pressure.

Balance Sheet

Leverage appears manageable with debt-to-equity around ~0.67 in TTM (Trailing-Twelve-Months), supported by a sizable equity base. Returns on equity are moderate (TTM ~6.9%), indicating reasonable profitability on shareholder capital but not standout for the sector. A watch item is the step-up in total debt versus recent annual levels, which reduces flexibility if the revenue slowdown persists.

Cash Flow

Cash generation is a relative strength: TTM (Trailing-Twelve-Months) operating cash flow (~¥592B) and free cash flow (~¥579B) are strong, and free cash flow growth is notably high (TTM ~31.0%), indicating improving cash efficiency. Free cash flow is slightly below net income (about 0.91x), still supportive of earnings quality. The main concern is that the operating cash flow coverage metric remains low in absolute terms in TTM, suggesting cash flow may not scale proportionally with the underlying base captured by that ratio.

Breakdown	Mar 2026	Mar 2025	Mar 2024	Mar 2023	Mar 2022
Income Statement
Total Revenue	1.92T	1.81T	1.67T	1.57T	1.21T
Gross Profit	1.39T	1.29T	1.16T	1.07T	773.40B
EBITDA	444.44B	361.30B	428.54B	337.77B	267.45B
Net Income	153.47B	113.20B	178.87B	77.32B	70.14B
Balance Sheet
Total Assets	9.16T	9.04T	8.59T	7.11T	6.70T
Cash, Cash Equivalents and Short-Term Investments	1.04T	1.42T	1.65T	1.13T	1.07T
Total Debt	1.69T	1.88T	1.91T	1.67T	1.39T
Total Liabilities	5.74T	5.60T	5.27T	4.13T	3.71T
Stockholders Equity	3.00T	3.04T	2.92T	2.68T	2.68T
Cash Flow
Free Cash Flow	419.85B	245.47B	-55.94B	-6.32B	137.18B
Operating Cash Flow	519.59B	316.48B	93.05B	266.31B	207.92B
Investing Cash Flow	-485.28B	-444.06B	319.79B	-303.90B	-12.35B
Financing Cash Flow	-437.15B	-110.80B	105.79B	91.63B	-12.07B

LY Corporation Technical Analysis

• Technical Analysis Sentiment: Negative
• Last Price: 417.20
• 50DMA: Negative
• 100DMA: Negative
• 200DMA: Negative
• MACD: Negative
• RSI: Neutral
• STOCH: Neutral

Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For JP:4689, the sentiment is Negative. The current price of 417.2 is above the 20-day moving average (MA) of 391.04, above the 50-day MA of 402.27, and below the 200-day MA of 462.82, indicating a bearish trend. The MACD of -7.35 indicates Negative momentum. The RSI at 46.47 is Neutral, neither overbought nor oversold. The STOCH value of 74.54 is Neutral, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Negative sentiment for JP:4689.

LY Corporation Peers Comparison

Name	Overall Rating	Market Cap	P/E Ratio	ROE	Dividend Yield	Revenue Growth	EPS Growth
3922	77 Outperform	¥31.37B	15.15	―	0.38%	18.02%	46.43%
2371	73 Outperform	¥337.36B	17.64	33.08%	3.62%	20.98%	0.48%
2120	72 Outperform	¥28.23B	4.87	9.76%	5.66%	-18.39%	―
4689	66 Neutral	¥2.60T	12.92	―	1.69%	6.39%	105.16%
2193	62 Neutral	¥12.38B	15.24	4.78%	―	-10.17%	-19.44%
Sector *	61 Neutral	$18.38B	12.79	-2.54%	3.03%	1.52%	-15.83%
5243	54 Neutral	¥38.19B	79.11	―	―	22.37%	655.34%

LY Corporation Corporate Events

LY Subsidiary PayPay Files for U.S. IPO and Parallel Japan Offering

PayPay Corporation, a consolidated subsidiary of LY Corporation, has filed a registration statement on Form F-1 with the U.S. Securities and Exchange Commission for a proposed initial public offering of American depositary shares on the Nasdaq Global Select Market under the symbol PAYP. In parallel, PayPay plans a public offering of the same ADSs in Japan, while LY Corporation expects to retain PayPay as a consolidated subsidiary and does not anticipate a material impact on its own consolidated results or financial position from the listing.

The most recent analyst rating on (JP:4689) stock is a Buy with a Yen448.00 price target. To see the full list of analyst forecasts on LY Corporation stock, see the JP:4689 Stock Forecast page.

LY Corporation Posts Strong Nine-Month Profit Jump, Expands Group Scope and Trims Full-Year Outlook

LY Corporation reported consolidated revenue of ¥1.495 trillion for the nine months ended 31 December 2025, up 4.7% year on year, with operating income rising 11.6% to ¥284.2 billion and net income attributable to owners of the parent surging 57.9% to ¥261.5 billion, supported by higher adjusted EBITDA and improved profitability metrics. Total assets expanded to ¥11.09 trillion and total equity to ¥3.60 trillion, although the equity ratio fell to 26.7%, while the group’s consolidation scope broadened with the addition of five entities including LINE Bank Taiwan, LINE MAN businesses and BEENOS, and the exclusion of Z Financial, alongside a planned full-year dividend of ¥7.30 per share and revised FY2025 performance estimates calling for modest revenue growth but a decline in adjusted EBITDA and EPS.

The most recent analyst rating on (JP:4689) stock is a Buy with a Yen460.00 price target. To see the full list of analyst forecasts on LY Corporation stock, see the JP:4689 Stock Forecast page.

LY Corporation to Absorb LINE Pay Unit After Ending Japan Payment Service

LY Corporation will absorb its wholly owned subsidiary LINE Pay Corporation through a simplified absorption-type merger effective March 31, 2026, following the termination in April 2025 of the LINE Pay mobile money transfer and payment service in Japan. The move is aimed at streamlining the group’s management structure and reallocating resources within its financial operations by dissolving the now redundant payments subsidiary without issuing new shares or cash, reflecting a strategic retreat from that specific payment service while seeking greater group synergies and operational efficiency.

The most recent analyst rating on (JP:4689) stock is a Hold with a Yen439.00 price target. To see the full list of analyst forecasts on LY Corporation stock, see the JP:4689 Stock Forecast page.

LY Corporation Chairperson Kentaro Kawabe to Retire at June 2026 Shareholders Meeting

LY Corporation announced that Chairperson and Representative Director Kentaro Kawabe will retire from his director position when his term ends at the conclusion of the company’s 31st Ordinary General Meeting of Shareholders scheduled for June 2026, following his own request to step down, which the board has accepted. The company said its Nominating and Remuneration Committee and Board of Directors will now deliberate the future board structure, with details to be disclosed later, signaling a forthcoming leadership transition that could influence corporate governance and strategic direction but with succession plans still to be finalized.

The most recent analyst rating on (JP:4689) stock is a Hold with a Yen439.00 price target. To see the full list of analyst forecasts on LY Corporation stock, see the JP:4689 Stock Forecast page.