TESS Holdings Co., Ltd. (5074) AI Stock Analysis

• Market Cap: ¥42.82B
• Dividend Yield: 1.46%
• Average Volume (3M): 976.56K
• Price to Earnings (P/E): 46.4
• Beta (1Y): 0.72
• Revenue Growth: 25.53%
• EPS Growth: -128.67%
• Country: JP
• Employees: 405
• Sector: Utilities
• Sector Strength: 65
• Industry: Renewable Utilities
• EPS (TTM): N/A
• Shares Outstanding: 70,649,130
• 10 Day Avg. Volume: 647,250
• 30 Day Avg. Volume: 976,560
• PEG Ratio: -1.37
• Price to Book (P/B): 0.55
• Price to Sales (P/S): 0.63
• P/FCF Ratio: -21.91
• 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: 58 Neutral
• Price Target: ¥603.00 ▲(71.31% Upside)
• Action: Reiterated Date: 02/25/26
• Date: Action: Reiterated 02/25/26

The score is held back primarily by weakened profitability and negative free cash flow despite improving revenue and leverage. Technicals are supportive due to a strong uptrend, but overbought signals add near-term risk. Valuation is the largest secondary headwind given the high P/E and modest dividend yield.

Positive Factors

Improving leverage

A meaningful reduction in debt-to-equity increases financial flexibility and lowers refinancing risk for multi-year renewable projects. This structural deleveraging supports capacity to fund operations or investments, improving resilience against cyclic shocks over the next 2-6 months.

Operating cash flow turned positive

Positive operating cash flow indicates the core business is now generating cash, reducing reliance on external financing for working capital. Over several quarters this can translate into stronger liquidity, ability to fund maintenance capex, and a pathway toward restoring free cash flow generation.

Revenue recovery

Consistent top-line recovery provides scale and pricing leverage, helping to spread fixed costs in asset-heavy renewable utilities. Combined with slightly improved EBITDA/EBIT margins, sustained revenue growth supports longer-term margin stabilization and investment capacity.

Negative Factors

Severe margin deterioration

A collapse in net margin materially weakens returns on projects and reduces retained earnings available for reinvestment. If cost pressures or pricing issues persist, profitability may remain impaired, limiting ability to fund growth internally and harming valuation of long-lived renewable assets.

Negative free cash flow

Persistent negative free cash flow implies the company requires external funding to support capex and debt service. Over a multi-quarter horizon this constrains strategic flexibility, raises refinancing and liquidity risk, and can delay deleveraging despite improving operating cash flow.

Eroding return on equity

Declining ROE signals the company is generating lower returns from shareholder capital, which can impair investor confidence and limit access to equity financing. Structurally weak ROE makes it harder to fund new renewable projects without dilutive or costly capital, slowing long-term growth.

TESS Holdings Co., Ltd. Business Overview & Revenue Model

Company Description

Tess Holdings Co.,Ltd. engages in the engineering and energy supply businesses. The company is involved in the engineering, procurement, and construction of energy conservation and renewable energy-related facilities. It is also involved in the operations and maintenance of renewable energy power plants; retail supply of electricity; and energy management, remote monitoring, and fuel supply services, as well as energy resource aggregation services, including supply-demand adjustment capacity, imbalance avoidance, rate reduction, and output suppression avoidance to general power transmission and distribution operators, power retailers, and consumers. As of February 28, 2021, its total installed capacity was approximately 200 MW. The company was formerly known as Tess Techno Service Co., Ltd. and changed its name to Tess Holdings Co., Ltd. in April 2018. Tess Holdings Co., Ltd. was incorporated in 2009 and is headquartered in Osaka, Japan.

How the Company Makes Money

TESS Holdings generates revenue through multiple streams, primarily from the sale of electronic components and systems to various sectors, including automotive and industrial. The company also derives income from research and development services, collaborating with clients to create customized solutions that meet specific needs. Key revenue streams include direct sales, long-term contracts with major manufacturers, and partnerships with technology firms that enhance its product offerings. Additionally, TESS Holdings benefits from economies of scale and operational efficiencies that allow it to maintain competitive pricing while maximizing profit margins.

TESS Holdings Co., Ltd. Financial Statement Overview

Summary

Mixed fundamentals: revenue rebounded (+9.22%), leverage has improved (debt-to-equity down to 2.18), and operating cash flow turned positive. Offsetting this, profitability has deteriorated sharply (net margin down to 0.56%) and free cash flow remains negative, raising liquidity and earnings-quality concerns.

Income Statement

TESS Holdings Co., Ltd. has shown a positive revenue growth rate of 9.22% in the most recent year, indicating a strong recovery from previous declines. However, the net profit margin has decreased significantly from 10.44% in 2023 to 0.56% in 2025, reflecting challenges in maintaining profitability. The gross profit margin has also declined over the years, suggesting increased cost pressures. Despite these challenges, the company has managed to improve its EBIT and EBITDA margins slightly, indicating operational efficiency improvements.

Balance Sheet

The company's debt-to-equity ratio has improved from a high of 8.37 in 2020 to 2.18 in 2025, showing better leverage management. However, the current ratio still indicates a relatively high level of debt compared to equity, which could pose risks if not managed carefully. The return on equity has decreased over the years, reflecting reduced profitability. The equity ratio has improved, indicating a stronger equity base relative to total assets.

Cash Flow

TESS Holdings has faced challenges with free cash flow, which remains negative, indicating potential liquidity issues. The operating cash flow has improved significantly, turning positive in 2025, which is a positive sign for cash generation. However, the free cash flow to net income ratio is negative, suggesting that the company is not converting its earnings into free cash flow effectively.

Breakdown	Jun 2024	Jun 2023	Jun 2022	Jun 2021	Jun 2021
Income Statement
Total Revenue	36.68B	30.64B	34.41B	34.95B	34.25B
Gross Profit	7.45B	6.55B	10.61B	8.46B	7.54B
EBITDA	5.84B	7.74B	9.27B	7.96B	6.90B
Net Income	205.00M	1.19B	3.59B	2.69B	1.99B
Balance Sheet
Total Assets	151.26B	119.13B	94.09B	94.26B	100.72B
Cash, Cash Equivalents and Short-Term Investments	22.88B	18.34B	15.36B	22.60B	26.04B
Total Debt	92.77B	65.64B	57.92B	61.11B	70.55B
Total Liabilities	108.40B	77.33B	65.75B	69.02B	77.91B
Stockholders Equity	42.56B	41.51B	28.25B	25.20B	22.73B
Cash Flow
Free Cash Flow	-1.06B	-15.25B	-2.10B	11.27B	-3.75B
Operating Cash Flow	7.81B	-42.00M	13.83B	14.65B	431.00M
Investing Cash Flow	-9.16B	-15.49B	-16.03B	-6.21B	-4.47B
Financing Cash Flow	3.79B	18.44B	-5.19B	-12.40B	17.10B

TESS Holdings Co., Ltd. Technical Analysis

• Technical Analysis Sentiment: Positive
• Last Price: 352.00
• 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:5074, the sentiment is Positive. The current price of 352 is below the 20-day moving average (MA) of 472.75, below the 50-day MA of 411.10, and below the 200-day MA of 373.16, indicating a bullish trend. The MACD of 56.84 indicates Negative momentum. The RSI at 78.54 is Negative, neither overbought nor oversold. The STOCH value of 86.18 is Negative, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Positive sentiment for JP:5074.

TESS Holdings Co., Ltd. Peers Comparison

Name	Overall Rating	Market Cap	P/E Ratio	ROE	Dividend Yield	Revenue Growth	EPS Growth
9513	82 Outperform	¥682.77B	6.98	7.92%	3.22%	-1.56%	9.17%
Sector *	66 Neutral	$17.65B	18.10	5.60%	3.62%	6.62%	11.55%
1407	61 Neutral	¥70.70B	13.09	―	4.59%	-6.23%	-19.98%
9514	60 Neutral	¥7.77B	13.21	―	2.29%	4.05%	38.64%
5074	58 Neutral	¥42.82B	46.35	―	1.46%	25.53%	-128.67%
9517	55 Neutral	¥57.42B	39.99	―	1.79%	-15.80%	―
9519	53 Neutral	¥67.21B	9.24	6.76%	―	28.85%	-9.70%

TESS Holdings Co., Ltd. Corporate Events

TESS Holdings Highlights Decarbonization Strategy and Integrated Energy Solutions Portfolio

TESS Holdings Co., Ltd. presented interim financial results materials emphasizing its vision to be a leading company in decarbonization through comprehensive energy-saving and solutions services. The release highlights the breadth of the TESS Group’s portfolio, from renewable generation and high-efficiency equipment to energy management and storage, underscoring its strategic positioning as an integrated provider of low-carbon energy infrastructure and efficiency upgrades for industrial and commercial clients.

This focus on total energy savings and multi-fuel, multi-technology systems suggests that TESS aims to capture growing demand for decarbonization solutions amid tightening environmental regulations and corporate sustainability goals. By showcasing capabilities across generation, efficiency, and grid-supporting storage, the company signals its intent to strengthen its role in Japan’s and potentially broader markets’ energy transition value chain, with implications for customers seeking turnkey, lower-emission energy systems.

The most recent analyst rating on (JP:5074) stock is a Hold with a Yen456.00 price target. To see the full list of analyst forecasts on TESS Holdings Co., Ltd. stock, see the JP:5074 Stock Forecast page.

TESS Holdings Delivers Strong Interim Earnings on Renewable Energy and Storage Demand

TESS Holdings reported strong consolidated results for the six months ended December 31, 2025, with year-on-year increases in both revenue and profit driven by its engineering and energy supply operations. Growth in renewable energy EPC projects, particularly power storage systems, and robust retail electricity sales underpinned the improved performance.

The company’s engineering segment benefited from rising inquiries and orders for storage battery EPC projects, while the energy supply segment saw higher revenue from renewable power generation and retail electricity. For the fiscal year ending June 30, 2026, TESS maintains its forecast of higher full-year revenue and profit, alongside a planned dividend of 5.80 yen per share, reflecting stronger profitability and improved return indicators such as ROE and ROIC, despite excluding the ongoing Kyoto Prefecture development project from its outlook.

The most recent analyst rating on (JP:5074) stock is a Sell with a Yen382.00 price target. To see the full list of analyst forecasts on TESS Holdings Co., Ltd. stock, see the JP:5074 Stock Forecast page.

TESS Holdings Delivers Strong First-Half Earnings and Confirms Robust FY2026 Outlook

TESS Holdings Co., Ltd. reported strong consolidated results for the six months ended December 31, 2025, with net sales up 50.1% year on year to ¥27.0 billion and operating profit rising 35.8% to ¥3.27 billion. Ordinary profit surged nearly tenfold and profit attributable to owners of parent more than doubled, lifting basic earnings per share to ¥18.69 and boosting equity and total assets, reflecting improved financial strength.

The company left its full-year forecast for the fiscal year ending June 30, 2026 unchanged, projecting a 28.1% increase in net sales to ¥47.0 billion and a 41.3% rise in operating profit to ¥3.6 billion, alongside sharply higher full-year earnings per share. TESS Holdings also plans to maintain a zero dividend at midyear and a modest year-end payout, signaling a continued focus on reinvestment and balance sheet reinforcement while still offering incremental returns to shareholders.

The most recent analyst rating on (JP:5074) stock is a Sell with a Yen382.00 price target. To see the full list of analyst forecasts on TESS Holdings Co., Ltd. stock, see the JP:5074 Stock Forecast page.