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

• Market Cap: ¥44.72B
• Dividend Yield: 1.46%
• Average Volume (3M): 976.56K
• Price to Earnings (P/E): 4.8
• Beta (1Y): 0.62
• 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: -22.23
• 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: ¥698.00 ▲(98.30% Upside)
• Action: Downgraded Date: 03/11/26
• Date: Action: Downgraded 03/11/26

The score is supported by strong technical momentum and a low P/E valuation, but is held back by weakening profitability and ongoing negative free cash flow despite improving operating cash generation and leverage.

Positive Factors

Revenue Growth

A 9.22% top-line increase shows durable demand recovery and expanding sales momentum. Over the next 2-6 months sustained revenue growth supports fixed-cost absorption, underpins operating leverage opportunities and provides a firmer base for margin and cash generation improvement.

Improving Leverage

Material deleveraging from 8.37 to 2.18 indicates management focus on reducing financial risk. Lower leverage improves resilience to macro shocks, increases capacity for strategic capex or M&A, and reduces interest burden risk, strengthening balance sheet durability over several quarters.

Operating Cash Flow Turnaround

A shift to positive operating cash flow is a fundamental turnaround signal: it shows core business generates cash, enabling internal funding for working capital and debt service. If sustained, this trend helps close the free cash flow gap and supports long-term financial flexibility.

Negative Factors

Negative Free Cash Flow

Persistent negative free cash flow constrains the company's ability to fund capex, pay down debt, or return capital without external financing. Over multiple quarters this limits strategic optionality and raises refinancing and liquidity risks despite improving operating cash flow.

Profit Margin Compression

A dramatic drop in net margin from double digits to near breakeven signals structural cost pressures or pricing erosion. Sustained margin compression undermines earnings quality and return on capital, making it harder to convert revenue growth into durable profits and cash generation.

Remaining Balance Sheet Risk

Although leverage has improved, the balance sheet still reflects relatively high indebtedness versus equity, keeping interest and refinancing vulnerability elevated. Over the medium term this can limit investment capacity and leave the company exposed if operating performance weakens.

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

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TESS Holdings Co., Ltd. Financial Statement Overview

Summary

Mixed fundamentals: revenue grew 9.22%, but profitability deteriorated sharply with net margin falling to 0.56% (from 10.44% in 2023). Leverage improved (debt-to-equity down to 2.18), yet free cash flow remains negative and cash conversion is weak despite operating cash flow turning positive.

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	7.10B	5.63B	10.03B	8.02B	6.94B
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	69.01B	77.91B
Stockholders Equity	42.56B	41.51B	28.25B	25.21B	22.73B
Cash Flow
Free Cash Flow	-1.05B	-15.18B	-979.00M	12.54B	-2.88B
Operating Cash Flow	7.82B	-42.00M	13.83B	14.65B	431.00M
Investing Cash Flow	-9.18B	-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: Positive
• RSI: Neutral
• STOCH: Neutral

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 610.10, below the 50-day MA of 487.98, and below the 200-day MA of 395.34, indicating a bullish trend. The MACD of 53.09 indicates Positive momentum. The RSI at 58.43 is Neutral, neither overbought nor oversold. The STOCH value of 51.85 is Neutral, 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	¥733.47B	6.68	7.17%	3.22%	-1.56%	9.17%
5074	68 Neutral	¥44.72B	4.80	―	1.46%	25.53%	-128.67%
1407	68 Neutral	¥71.14B	-69.59	―	4.59%	-6.23%	-19.98%
9517	66 Neutral	¥75.68B	5.57	―	1.79%	-15.80%	―
Sector *	66 Neutral	$17.65B	18.10	5.60%	3.62%	6.62%	11.55%
9514	60 Neutral	¥8.03B	11.52	―	2.29%	4.05%	38.64%
9519	53 Neutral	¥68.85B	48.38	7.71%	―	28.85%	-9.70%

TESS Holdings Co., Ltd. Corporate Events

TESS Holdings Unit Details Series of Covenant-Linked Short-Term Loans for Working Capital

TESS Holdings disclosed that its consolidated subsidiary TESS Engineering has been using a syndicated commitment line arranged by Sumitomo Mitsui Banking Corporation to secure working capital, with a total commitment amount of ¥9 billion and no collateral attached. The disclosure, made retrospectively with an apology for the delay, outlines a series of short-term borrowings executed between April and October 2025, each resolved and drawn monthly with repayments due at the end of the following month.

The borrowing schedule shows repeated drawdowns ranging from ¥5.22 billion to ¥8.1 billion, underscoring the subsidiary’s reliance on flexible, short-term bank financing to match capital needs. While the company notes that these borrowings are governed by financial covenants, the announcement mainly signals an effort to stabilize liquidity for ongoing operations in energy and environmental projects, and to formalize information to markets that had not been promptly disclosed earlier.

The most recent analyst rating on (JP:5074) stock is a Hold with a Yen603.00 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 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.