DENTSU SOKEN INC. (4812) AI Stock Analysis

• Market Cap: ¥378.17B
• Dividend Yield: 1.48%
• Average Volume (3M): 90.11K
• Price to Earnings (P/E): 23.5
• Beta (1Y): 0.29
• Revenue Growth: 8.02%
• EPS Growth: 20.57%
• Country: JP
• Employees: 4,413
• Sector: Technology
• Sector Strength: 88
• Industry: Information Technology Services
• EPS (TTM): 23.82
• Shares Outstanding: 195,547,440
• 10 Day Avg. Volume: 107,990
• 30 Day Avg. Volume: 90,113
• PEG Ratio: 3.96
• Price to Book (P/B): 5.34
• Price to Sales (P/S): 3.24
• P/FCF Ratio: 28.41
• 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): 94.79
• Revenue Forecast (FY): ¥182.97B

• Rating: 68 Neutral
• Price Target: ¥2,014.00 ▼(-26.44% Downside)
• Action: Downgraded Date: 02/18/26
• Date: Action: Downgraded 02/18/26

Score is driven by strong financial quality (steady growth, improving profitability, and very low leverage), partially offset by very weak technicals (price below all key moving averages and negative MACD, despite oversold readings). Valuation is moderately supportive with a reasonable P/E and a ~2.1% dividend yield.

Positive Factors

Conservative balance sheet

Very low leverage gives durable financial flexibility. With debt-to-equity around 2–3%, the company can fund organic investment, absorb project timing swings, pursue selective M&A or capital returns, and better withstand downturns without stressing the capital structure.

Consistent revenue growth

Steady mid-to-high single-digit revenue growth from 2020–2025 indicates persistent demand for its systems-integration and recurring services. That trend supports predictable backlog, repeat client engagements and capacity planning, underpinning reliable top-line expansion over the medium term.

Improving profitability margins

Meaningful margin expansion shows operational leverage and improved delivery efficiency. Stable gross margins around the mid-30s plus higher EBIT and net margins point to greater pricing power and a shift toward higher-margin recurring work, supporting sustainable profitability.

Negative Factors

Cash-flow volatility

Year-to-year swings in operating and free cash flow create planning risk. For a project-driven services firm, volatile cash conversion can complicate capex, hiring, dividend policy and working capital management, reducing predictability despite overall positive FCF recently.

Limited liquidity disclosure

The balance sheet summary omits specific cash and current asset figures, obscuring short-term liquidity. Given project billing and receivable timing in IT services, missing liquidity visibility elevates execution risk and makes near-term cash coverage harder to assess.

Moderation and missing 2025 margin detail

The latest-year data shows moderated revenue growth and missing margin detail for 2025. This reduced transparency and potential deceleration could reflect client timing, pricing pressure or competitive shifts, threatening momentum in revenue and margin expansion if persistent.

DENTSU SOKEN INC. Business Overview & Revenue Model

Company Description

Dentsu Soken Inc. provides information technology solutions. The company operates through Financial Solutions, Business Solutions, Manufacturing Solutions, and Communication IT segments. The Financial Solutions segment offers banking, capital market, financial engineering, lending, and leasing solutions. The Business Solutions segment provides human capital management and accounting management solutions through various platforms. The Manufacturing Solutions segment offers 3D design and simulations, and other smart soluitons. The Communication IT segment provides software services. Dentsu Soken Inc. was formerly known as Information Services International-Dentsu, Ltd. and changed its name to Dentsu Soken Inc. in January 2024. The company was incorporated in 1975 and is headquartered in Tokyo, Japan. Dentsu Soken Inc. operate as a subsidiary Dentsu Group Inc.

How the Company Makes Money

DENTSU SOKEN generates revenue primarily through its advertising and marketing services, which include media buying, campaign management, and digital marketing solutions. The company earns money by charging clients for the development and execution of advertising campaigns, management of media placements, and consulting services related to brand strategy and consumer engagement. Key revenue streams include fees from client contracts, performance-based incentives linked to campaign success, and commissions from media purchases. Additionally, partnerships with technology firms and data analytics providers enhance its service offerings, contributing to its financial performance by enabling more effective marketing strategies that drive client success.

DENTSU SOKEN INC. Financial Statement Overview

Summary

Strong fundamentals: consistent revenue growth over 2020–2025, improving operating and net margins through 2023–2024, and a very conservative balance sheet with very low leverage and mid-teens ROE. Main drawback is noticeable operating/free-cash-flow volatility (despite remaining positive and strong most recently).

Income Statement

Revenue has grown consistently from 2020 to 2025 (annual growth mostly mid-to-high single digits, with a stronger 2022), indicating steady demand. Profitability is solid for an IT services business: gross margin stayed stable around the mid-30% range (2020–2024), while operating profitability improved meaningfully (EBIT margin rose from ~10% in 2020 to ~14–15% in 2023–2024). Net margin also expanded from ~6.8% (2020) to ~9.9–10.3% (2023–2024). The main watch-out is that the latest year (2025) lacks margin detail in the provided data, and revenue growth appears to have moderated versus the 2022–2024 pace.

Balance Sheet

The balance sheet looks very conservative, with very low debt relative to equity (debt-to-equity around ~2–3% in 2021–2024), giving the company ample financial flexibility. Equity and assets have steadily increased over time, supporting balance sheet strength. Returns on shareholder capital are also strong and consistent (return on equity in the mid-teens across 2021–2024). A minor concern is that the data provided does not include liquidity details (like cash or current assets), but leverage risk appears low based on total debt.

Cash Flow

Cash generation is generally healthy, with free cash flow positive every year and reaching very strong levels in 2024–2025 (free cash flow nearly matching net income in 2023–2024). However, cash flow has shown noticeable volatility: operating cash flow dipped sharply in 2022–2023 before rebounding strongly in 2024, and free cash flow growth swung from negative (2022) to modest (2023) to very strong (2024). Overall, cash conversion is good, but the year-to-year variability is the key weakness to monitor.

Breakdown	TTM	Dec 2025	Dec 2024	Dec 2023	Dec 2022	Dec 2021
Income Statement
Total Revenue	158.65B	164.87B	152.64B	142.61B	129.05B	112.08B
Gross Profit	57.83B	60.38B	56.12B	51.78B	46.79B	40.02B
EBITDA	25.95B	27.49B	25.21B	24.18B	20.78B	16.19B
Net Income	15.55B	16.36B	15.12B	14.66B	12.60B	8.94B
Balance Sheet
Total Assets	150.44B	165.06B	147.33B	133.33B	121.89B	108.19B
Cash, Cash Equivalents and Short-Term Investments	5.64B	8.36B	62.31B	58.03B	53.76B	50.15B
Total Debt	2.54B	2.22B	1.96B	2.10B	1.92B	1.96B
Total Liabilities	55.58B	64.89B	56.14B	50.36B	48.02B	42.72B
Stockholders Equity	94.85B	100.16B	91.19B	82.97B	73.84B	65.45B
Cash Flow
Free Cash Flow	0.00	18.81B	23.39B	10.67B	9.03B	14.54B
Operating Cash Flow	0.00	19.12B	23.72B	13.05B	11.91B	16.98B
Investing Cash Flow	0.00	-3.02B	-11.89B	-2.36B	-3.13B	-2.81B
Financing Cash Flow	0.00	-8.55B	-7.98B	-6.70B	-5.42B	-4.46B

DENTSU SOKEN INC. Technical Analysis

• Technical Analysis Sentiment: Negative
• Last Price: 2738.00
• 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:4812, the sentiment is Negative. The current price of 2738 is above the 20-day moving average (MA) of 2005.45, above the 50-day MA of 2359.60, and above the 200-day MA of 2298.40, indicating a bearish trend. The MACD of -153.42 indicates Negative momentum. The RSI at 41.70 is Neutral, neither overbought nor oversold. The STOCH value of 74.38 is Neutral, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Negative sentiment for JP:4812.

DENTSU SOKEN INC. Peers Comparison

Name	Overall Rating	Market Cap	P/E Ratio	ROE	Dividend Yield	Revenue Growth	EPS Growth
3636	77 Outperform	¥77.58B	9.87	―	3.28%	5.28%	28.90%
9715	75 Outperform	¥151.58B	10.80	11.52%	2.76%	4.00%	38.72%
5574	74 Outperform	¥32.69B	58.34	―	―	29.61%	93.16%
3655	70 Outperform	¥59.06B	606.48	―	0.28%	8.64%	-23.20%
4812	68 Neutral	¥378.17B	23.50	―	1.48%	8.02%	20.57%
Sector *	61 Neutral	$37.18B	12.37	-10.20%	1.83%	8.50%	-7.62%
4819	55 Neutral	¥93.49B	50.39	4.18%	1.97%	19.61%	―