Trend Micro (4704) AI Stock Analysis

• Market Cap: ¥692.98B
• Dividend Yield: 2.57%
• Average Volume (3M): 775.08K
• Price to Earnings (P/E): 19.8
• Beta (1Y): 0.43
• Revenue Growth: 1.91%
• EPS Growth: 44.78%
• Country: JP
• Employees: 6,869
• Sector: Technology
• Sector Strength: 88
• Industry: Software - Infrastructure
• EPS (TTM): 57.56
• Shares Outstanding: 140,901,610
• 10 Day Avg. Volume: 999,720
• 30 Day Avg. Volume: 775,083
• PEG Ratio: 18.99
• Price to Book (P/B): 6.55
• Price to Sales (P/S): 3.10
• P/FCF Ratio: 13.48
• 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: ¥6,540.00
• Price Target Upside: 14.98% Upside
• Rating Consensus: Hold
• Number of Analyst Covering: 5
• EPS Forecast (FY): 290.51
• Revenue Forecast (FY): ¥291.92B

• Rating: 71 Outperform
• Price Target: ¥5,421.00 ▼(-4.69% Downside)
• Action: Reiterated Date: 02/25/26
• Date: Action: Reiterated 02/25/26

The score is driven primarily by strong financial performance (margin recovery, zero debt, and solid cash generation). This is partly offset by weak technicals (price below key moving averages, negative MACD, and oversold RSI), while valuation is supportive with a moderate P/E and a ~3.26% dividend yield.

Positive Factors

Debt-free balance sheet

A zero-debt balance sheet materially reduces financial risk and preserves strategic optionality. Over the next 2–6 months this durability supports continued investment in R&D, M&A flexibility, and resilience to macro shocks, enabling steady execution of cybersecurity product and channel strategies.

Strong cash generation

High free cash flow conversion indicates earnings quality and funds internal investments, product development, and recurring SaaS operations without relying on external financing. Reliable cash generation supports long-term subscription growth, shareholder returns, and sustained competitive investment.

High gross margins and improved operating profitability

Sustained high gross margins and a rebound in EBIT margin reflect scalable software economics and operating leverage. This structural margin profile supports reinvestment in cloud and threat intelligence capabilities while preserving profitability as revenues grow over the medium term.

Negative Factors

Prior net income volatility

Historical swings in net income, particularly in 2023, signal earnings sensitivity to one-offs or cyclical items. This volatility can complicate forecasting, make budgeting for long-term R&D and go-to-market plans more difficult, and raise execution risk for multi-quarter initiatives.

Lumpy free cash flow over cycle

Intermittent negative FCF growth and past lower conversion create uncertainty in cash timing. For a subscription-heavy software firm, lumpiness can constrain consistent reinvestment pacing, impact discretionary spending decisions, and require larger cash buffers despite recent improvement.

Profitability below prior peak

While margins have recovered materially, net margin remains well below earlier peaks, indicating structural or competitive pressures limiting full margin restoration. This may reflect higher ongoing investment levels or pricing mix shifts that could temper long-term earnings power versus historic highs.

Trend Micro Business Overview & Revenue Model

Company Description

Trend Micro Incorporated develops and sells security-related software for computers and the Internet primarily in Japan. The company offers hybrid cloud security solutions, such conformity, workload, container, file storage, application, network, and open-source security products. It also provides intrusion prevention, threat protection, industrial and mobile network security products, as well as offers email, mobile, web, and industrial endpoint security products. In addition, the company offers cloud migration, cloud-native app development, cloud operational, data center security, and SaaS application solutions. Further, it provides ICS/OT, connected car, and 5G security solutions, as well as offers ransomware, end-of-support systems, compliance, detection, and response solutions. It serves oil and gas, healthcare, manufacturing, and electric utility industries. The company was incorporated in 1965 and is headquartered in Tokyo, Japan.

How the Company Makes Money

Trend Micro makes money primarily through the sale of its security software and services. The company generates revenue from licensing its software products to a wide range of customers, including individuals, small to medium businesses, and large enterprises. Its key revenue streams include subscription fees for its software as a service (SaaS) offerings, which provide ongoing protection and threat intelligence updates. Additionally, Trend Micro partners with major technology companies to integrate its security solutions into their platforms, expanding its reach and customer base. Professional services, such as cybersecurity consulting and support, also contribute to its revenue. The company's strategic partnerships and continuous innovation in threat detection and response technologies are significant factors that enhance its earnings potential.

Trend Micro Financial Statement Overview

Summary

Strong overall fundamentals supported by steady revenue growth, a clear rebound in profitability (EBIT margin expanding to ~21% in 2025 and net margin recovering to ~12%–13%), a zero-debt balance sheet, and healthy free cash flow that closely tracks net income in 2024–2025. Main watch-outs are the prior volatility in net income (notably 2023) and some historical lumpiness in free cash flow growth.

Income Statement

Revenue has grown steadily over time (2020–2025), with 2025 showing a modest year-over-year increase off a stronger 2024. Profitability is solid for the sector with consistently high gross margins (~74%–78%) and a meaningful rebound in operating profitability, as EBIT margin expanded from ~13% (2023) to ~21% (2025). Net margin recovered sharply from a weak 2023 (~4%) back to ~12%–13% in 2024–2025, though it remains below the ~20% peak seen in 2021, indicating profitability is improved but not fully back to prior highs.

Balance Sheet

The company carries no debt across the periods provided, which materially reduces financial risk and improves resilience. Equity remains sizable and the business produces strong shareholder returns, with return on equity in the mid-to-high 20% range in 2024–2025 after an unusually weak 2023. A key watch-out is the large equity swing in 2023 versus 2024–2025, which suggests notable balance-sheet variability even if leverage is not a concern.

Cash Flow

Cash generation is healthy: free cash flow is strong and in 2024–2025 it nearly matches net income (free cash flow to net income ~0.97–0.98), supporting earnings quality. Free cash flow growth is positive in 2024 and 2025, including a strong step-up in 2025 versus 2024. The main weakness is some lumpiness over the cycle (negative free cash flow growth in 2021–2023 and a lower conversion level in 2023), indicating cash flow can fluctuate even though the recent trend is favorable.

Breakdown	Dec 2025	Dec 2024	Dec 2023	Dec 2022	Dec 2021
Income Statement
Total Revenue	275.98B	272.64B	248.69B	223.79B	190.36B
Gross Profit	212.27B	207.66B	185.03B	169.50B	148.34B
EBITDA	84.83B	77.03B	60.30B	67.13B	73.28B
Net Income	34.52B	34.36B	10.73B	29.84B	38.37B
Balance Sheet
Total Assets	422.24B	400.32B	492.63B	470.80B	420.46B
Cash, Cash Equivalents and Short-Term Investments	231.03B	210.90B	299.03B	242.85B	256.80B
Total Debt	0.00	0.00	0.00	0.00	0.00
Total Liabilities	291.11B	280.87B	278.21B	242.12B	199.03B
Stockholders Equity	130.63B	119.44B	214.39B	228.66B	220.64B
Cash Flow
Free Cash Flow	63.48B	45.56B	30.87B	35.92B	36.48B
Operating Cash Flow	64.64B	46.78B	57.23B	56.90B	55.27B
Investing Cash Flow	2.86B	5.04B	31.00B	-67.72B	2.58B
Financing Cash Flow	-29.57B	-130.90B	-43.43B	-30.44B	-16.45B

Trend Micro Technical Analysis

• Technical Analysis Sentiment: Negative
• Last Price: 5688.00
• 50DMA: Negative
• 100DMA: Negative
• 200DMA: Negative
• MACD: Positive
• RSI: Neutral
• STOCH: Neutral

Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For JP:4704, the sentiment is Negative. The current price of 5688 is above the 20-day moving average (MA) of 5616.15, below the 50-day MA of 6113.44, and below the 200-day MA of 7923.05, indicating a bearish trend. The MACD of -269.31 indicates Positive momentum. The RSI at 36.83 is Neutral, neither overbought nor oversold. The STOCH value of 30.38 is Neutral, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Negative sentiment for JP:4704.

Trend Micro Peers Comparison

Name	Overall Rating	Market Cap	P/E Ratio	ROE	Dividend Yield	Revenue Growth	EPS Growth
3040	73 Outperform	¥35.54B	16.09	19.71%	3.09%	3.44%	79.35%
4704	71 Outperform	¥692.98B	19.82	29.20%	2.57%	1.91%	44.78%
4475	68 Neutral	¥32.40B	24.33	―	0.39%	30.59%	65.14%
4493	67 Neutral	¥16.26B	20.22	―	0.17%	31.39%	13.12%
4417	65 Neutral	¥39.10B	31.12	―	0.90%	25.06%	37.24%
3042	62 Neutral	¥2.45B	32.27	―	0.58%	25.37%	―
Sector *	61 Neutral	$37.18B	12.37	-10.20%	1.83%	8.50%	-7.62%

Trend Micro Corporate Events

Trend Micro Launches ¥5 Billion Share Buyback to Boost Capital Efficiency

Trend Micro Incorporated, a global cybersecurity leader, offers an AI-powered security platform that protects organizations and individuals across cloud, network, device, and endpoint environments. With a strong presence in cloud and enterprise cybersecurity and operations in 70 countries, the company delivers advanced threat defense and centralized visibility tailored to platforms such as AWS, Microsoft, and Google.

Trend Micro’s board has approved a share buyback program of up to 1.2 million common shares, representing about 0.92% of its outstanding stock, with a total purchase value capped at 5 billion yen. Executed via open-market purchases on the Tokyo Stock Exchange between February 19 and March 24, 2026, the initiative aims to enhance shareholder returns, optimize cash holdings, and increase capital efficiency amid a changing business environment.

The buyback underscores Trend Micro’s capital allocation strategy that prioritizes both dividends and repurchases, signaling confidence in its financial position and long-term prospects. By reducing the free float and potentially boosting earnings per share, the program may support shareholder value while giving the company flexibility to adjust its capital structure in response to market and industry conditions.

The most recent analyst rating on (JP:4704) stock is a Hold with a Yen6500.00 price target. To see the full list of analyst forecasts on Trend Micro stock, see the JP:4704 Stock Forecast page.

Trend Micro Plans Higher Year-End Dividend and Reaffirms Aggressive Capital Return Policy

Trend Micro’s board has approved a proposal for a year-end cash dividend of 185 yen per share for the fiscal year ending December 31, 2025, up slightly from 184 yen a year earlier, with a total payout of 24.175 billion yen. The dividend, sourced from retained earnings and effective March 27, 2026, remains subject to shareholder approval at the March 26, 2026 general meeting.

The company reiterated its policy of returning essentially all net income remaining after growth investments, mainly through year-end dividends and share buybacks, while targeting a 70% dividend payout ratio over time. Management signaled it still holds excess cash even after 2024’s large shareholder returns and plans to enhance capital efficiency via continued capital returns and potential M&A, though timing and subsidiary profit repatriation may cause yearly deviations from the payout target.

The most recent analyst rating on (JP:4704) stock is a Hold with a Yen6500.00 price target. To see the full list of analyst forecasts on Trend Micro stock, see the JP:4704 Stock Forecast page.

Trend Micro Weighs Stock Split to Broaden Investor Base

Trend Micro has outlined its stance on investment units, stating that lowering the per-unit investment amount is an important tool to broaden its shareholder base and invigorate trading in its shares. The company believes that a more accessible investment unit can attract a wider range of investors and support a more active market for its stock.

In line with this view, the cybersecurity firm is considering future reductions in its investment unit through potential stock splits, while monitoring its share price, broader market conditions, and expectations from exchanges and society. This suggests a willingness to adjust its capital market strategy to enhance liquidity and inclusivity for current and prospective shareholders.

The most recent analyst rating on (JP:4704) stock is a Hold with a Yen6500.00 price target. To see the full list of analyst forecasts on Trend Micro stock, see the JP:4704 Stock Forecast page.

Trend Micro Lifts Profitability and Cash Reserves, Signals Further Growth in 2026

Trend Micro reported modest growth in consolidated net sales for fiscal 2025, with revenue rising 1.2% to ¥275.98 billion while operating income jumped 20.1% to ¥57.78 billion, reflecting improved profitability despite only a slight increase in net income attributable to owners of the parent. The company strengthened its financial position, with total assets climbing to ¥422.24 billion, net assets rising to ¥131.13 billion, cash and cash equivalents expanding to ¥230.46 billion, and it maintained a stable annual dividend of ¥185 per share while forecasting 9.2% sales growth and a 6.0% increase in net income for fiscal 2026, even as it anticipates slightly lower operating profit.

The most recent analyst rating on (JP:4704) stock is a Hold with a Yen6500.00 price target. To see the full list of analyst forecasts on Trend Micro stock, see the JP:4704 Stock Forecast page.

Trend Micro Finalizes Terms for New Executive and Employee Stock Options

Trend Micro has set the final terms for issuing 3,700 stock acquisition rights as stock options, covering up to 370,000 ordinary shares, to 18 directors and employees of the company and its subsidiaries. The options, which do not require a cash payment for allocation and are not being granted on specially advantageous terms, carry an exercise price of 692,100 yen per option (6,921 yen per share), aligning management and employee incentives with shareholder interests and reinforcing long-term commitment to the cybersecurity group’s growth.

The most recent analyst rating on (JP:4704) stock is a Hold with a Yen8100.00 price target. To see the full list of analyst forecasts on Trend Micro stock, see the JP:4704 Stock Forecast page.

Trend Micro Nears Full Execution of ¥10 Billion Share Buyback Program

Trend Micro has completed a share repurchase program authorized under Japan’s Company Law, buying back a total of 1,322,500 shares of its common stock for approximately 9.999 billion yen through open-market transactions on the Tokyo Stock Exchange. The latest tranche, conducted between December 1 and December 17, 2025, accounted for 525,300 shares at a cost of about 3.77 billion yen, bringing the program—initially approved for up to 1.67 million shares and 10 billion yen—to a near-full execution level, a move that is likely to support shareholder returns and optimize capital structure.

The most recent analyst rating on (JP:4704) stock is a Hold with a Yen8100.00 price target. To see the full list of analyst forecasts on Trend Micro stock, see the JP:4704 Stock Forecast page.

Trend Micro Announces Share Repurchase to Enhance Shareholder Value

Trend Micro announced the repurchase of 797,200 shares of its common stock, totaling a cost of 6,232,402,800 yen, as part of a previously approved plan by its Board of Directors. This strategic move is aimed at optimizing capital structure and enhancing shareholder value, reflecting the company’s robust financial position and commitment to its investors.

The most recent analyst rating on (JP:4704) stock is a Hold with a Yen8100.00 price target. To see the full list of analyst forecasts on Trend Micro stock, see the JP:4704 Stock Forecast page.

Trend Micro Allocates Stock Options to Align Interests and Boost Performance

Trend Micro has announced the allocation of stock options to its directors and employees, as well as those of its subsidiaries, to align their interests with the company’s stock performance. This move aims to enhance motivation and morale, ultimately improving the company’s performance and shareholder value.

The most recent analyst rating on (JP:4704) stock is a Hold with a Yen8100.00 price target. To see the full list of analyst forecasts on Trend Micro stock, see the JP:4704 Stock Forecast page.