Japan Steel Works (5631) AI Stock Analysis

• Market Cap: €661.92B
• Dividend Yield: 1.03%
• Average Volume (3M): 946.71K
• Price to Earnings (P/E): 29.5
• Beta (1Y): 1.59
• Revenue Growth: 10.11%
• EPS Growth: 41.98%
• Country: JP
• Employees: 5,115
• Sector: Industrials
• Sector Strength: 72
• Industry: Industrial - Machinery
• EPS (TTM): 77.58
• Shares Outstanding: 74,415,910
• 10 Day Avg. Volume: 1,238,970
• 30 Day Avg. Volume: 946,713
• PEG Ratio: 0.83
• Price to Book (P/B): 1.99
• Price to Sales (P/S): 1.55
• P/FCF Ratio: -18.89
• 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: €10,903.05
• Price Target Upside: 24.86% Upside
• Rating Consensus: Strong Buy
• Number of Analyst Covering: 3
• EPS Forecast (FY): N/A
• Revenue Forecast (FY): N/A

• Rating: 59 Neutral
• Price Target: ¥9,981.00 ▲(14.30% Upside)

Japan Steel Works' stock score is primarily influenced by its strong financial performance, particularly in revenue growth and operational efficiency. However, technical indicators suggest a bearish trend, and the valuation indicates the stock may be overvalued. Cash flow challenges also pose a risk to future financial stability.

Positive Factors

Sustained Revenue Growth

Double-digit revenue growth signals structurally strong end-market demand and successful commercial execution. Over a multi-quarter horizon, consistent top-line expansion supports investment in R&D and capacity, enabling product development and long-term market share gains.

Conservative Capital Structure

Low leverage and a near-50% equity ratio provide financial flexibility to fund capital expenditure, weather industry cycles, and pursue strategic projects without excessive refinancing risk. This strengthens resilience and preserves optionality over several quarters.

Healthy Operating Margins

Robust gross and improving EBIT/EBITDA margins indicate durable operational efficiency and pricing power in specialized steel and machinery products. Sustained margins support reinvestment and buffer profitability through cyclical downturns over the medium term.

Negative Factors

Negative Free Cash Flow

A swing to materially negative free cash flow undermines internal funding for growth and dividends and raises reliance on external financing. If persistent, it constrains strategic investments and increases vulnerability to demand shocks over the coming quarters.

Weak Cash Conversion

Negative cash conversion signals earnings quality and working-capital issues, meaning reported profits may not translate into cash. This weakens liquidity and could force cutbacks or debt-funded operations, affecting stability over a 2-6 month horizon.

Cyclical End-Market Exposure

Concentration in cyclical sectors exposes revenue and backlog to macro and capex cycles. Structural volatility in construction and energy investment can produce uneven demand and margin pressure, increasing earnings variability across multiple quarters.

Japan Steel Works Business Overview & Revenue Model

Company Description

The Japan Steel Works, Ltd. produces and sells steel and machinery products in Japan, China, and internationally. The company operates through Industrial Machinery Products, Steel and Energy Products, and Other Businesses segments. It offers monobloks rotor shafts for power generators; shell flanges for nuclear reactor pressure vessels; turbine castings for thermal power plants; clad steel plates and pipes; high alloy and stainless steel, and Ni-based alloy products; forged steel rolls for steel mills; forged and cast steel products, steel plates, and pressure vessels for use in chemical and petrochemical industries, and other industrial machineries; and pressure vessels maintenance and inspection services for pressure vehicles. The company also provides plastic production machinery, such as polyolefin pelletizers, twin screw extruders, film and sheet manufacturing equipment, and spinning extruders; injection and blow molding machines; and excimer laser annealing and laser lift-off systems, rolling stock parts, and presses/laminators. In addition, it engages in the design, manufacture, and maintenance of defense equipment from firing systems to missile launchers, as well as R&D on new defense equipment and systems; and offers steel tanks for high-pressure hydrogen storage installed in hydrogen filling stations that are used by fuel cell vehicles. Further, the company is involved in the provision of maintenance concierge, retrofitting, and schooling training services; and provides deposition and crystal, as well as wind power generation equipment. The Japan Steel Works, Ltd. was founded in 1907 and is headquartered in Tokyo, Japan.

How the Company Makes Money

Japan Steel Works generates revenue through multiple streams, primarily from the sale of its steel products, which include high-quality steel plates and specialized alloys used in construction and manufacturing. The company also earns income from its machinery division, which produces heavy machinery and equipment for industrial applications. Additional revenue is generated from providing environmental solutions and equipment, catering to the growing demand for sustainable practices. Strategic partnerships with major industries and government contracts further enhance its earnings, as JSW collaborates with key players in sectors such as energy and infrastructure to deliver customized solutions. The company's focus on research and development ensures a continuous pipeline of innovative products, positioning it well in competitive markets.

Japan Steel Works Financial Statement Overview

Summary

Japan Steel Works demonstrates strong revenue growth and operational efficiency with solid balance sheet metrics. However, cash flow management poses challenges, warranting attention to improve cash conversion and free cash flow generation to sustain future growth and financial stability.

Income Statement

Japan Steel Works shows a consistent revenue stream with noticeable growth. The Gross Profit Margin is strong at approximately 24.5% for 2025. However, the Net Profit Margin has slightly decreased to 7.2% in 2025 from 5.9% in 2024, reflecting some pressure on net earnings. The EBIT and EBITDA margins have improved to 9.2% and 12.7% respectively, indicating better operational efficiency.

Balance Sheet

The company maintains a solid financial structure with a Debt-to-Equity Ratio of approximately 0.23, showing prudent leverage. The Return on Equity (ROE) is fairly robust, around 9.3%, indicating good profitability from shareholders' equity. The Equity Ratio stands strong at about 48.5%, reflecting a balanced capital structure.

Cash Flow

The Cash Flow statement reveals some challenges, particularly with a negative Free Cash Flow of -20.4 billion yen in 2025, down from 11.4 billion yen in 2024. The Operating Cash Flow to Net Income Ratio has turned negative, indicating difficulties in converting earnings into cash flow. The Free Cash Flow to Net Income Ratio reflects constraints in cash generation relative to net income.

Breakdown	TTM	Dec 2025	Dec 2024	Dec 2023	Dec 2022	Dec 2021
Income Statement
Total Revenue	268.50B	248.56B	252.50B	238.72B	213.79B	198.04B
Gross Profit	63.50B	60.99B	56.81B	49.38B	47.82B	42.28B
EBITDA	32.24B	31.56B	27.32B	25.46B	26.36B	19.48B
Net Income	18.72B	17.96B	14.28B	11.97B	13.95B	6.89B
Balance Sheet
Total Assets	395.64B	398.12B	366.77B	348.36B	339.73B	316.25B
Cash, Cash Equivalents and Short-Term Investments	90.35B	75.90B	97.61B	87.29B	106.24B	89.44B
Total Debt	56.87B	43.53B	43.63B	43.42B	58.44B	58.04B
Total Liabilities	200.44B	203.02B	188.16B	187.72B	188.65B	174.26B
Stockholders Equity	193.94B	193.22B	176.98B	159.10B	149.44B	140.40B
Cash Flow
Free Cash Flow	0.00	-20.40B	11.46B	-7.09B	13.52B	6.44B
Operating Cash Flow	0.00	-4.57B	21.71B	-986.00M	22.32B	14.71B
Investing Cash Flow	0.00	-12.27B	-6.84B	947.00M	-2.98B	-3.24B
Financing Cash Flow	0.00	-5.72B	-4.90B	-20.11B	-2.86B	2.77B

Japan Steel Works Technical Analysis

• Technical Analysis Sentiment: Negative
• Last Price: 8732.00
• 50DMA: Positive
• 100DMA: Negative
• 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:5631, the sentiment is Negative. The current price of 8732 is below the 20-day moving average (MA) of 9017.50, above the 50-day MA of 8620.64, and above the 200-day MA of 8401.52, indicating a neutral trend. The MACD of 27.07 indicates Positive momentum. The RSI at 48.90 is Neutral, neither overbought nor oversold. The STOCH value of 47.55 is Neutral, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Negative sentiment for JP:5631.

Japan Steel Works Peers Comparison

Name	Overall Rating	Market Cap	P/E Ratio	ROE	Dividend Yield	Revenue Growth	EPS Growth
6113	76 Outperform	¥687.91B	24.57	5.14%	3.31%	-1.14%	-19.79%
6118	74 Outperform	¥66.62B	12.71	―	2.54%	2.00%	39.80%
6508	71 Outperform	¥296.72B	13.29	14.28%	2.40%	8.03%	23.50%
Sector *	63 Neutral	$10.79B	15.43	7.44%	2.01%	2.89%	-14.66%
6135	61 Neutral	¥281.81B	15.21	6.63%	0.91%	9.03%	10.76%
5631	59 Neutral	€661.92B	29.46	11.66%	1.03%	10.11%	41.98%
6302	59 Neutral	¥648.41B	181.68	0.59%	2.95%	-2.67%	-85.21%

Japan Steel Works Corporate Events

Japan Steel Works to Absorb M&E Subsidiary to Boost Synergies and Growth

The Japan Steel Works has approved an absorption-type merger of its wholly owned subsidiary Japan Steel Works M&E, Inc., effective April 1, 2026, with JSW as the surviving entity and no new shares or consideration to be issued. This move follows a 2020 reorganization that had already improved profitability at the Materials and Engineering Products Business and is aimed at sustaining that growth by integrating operations to better allocate management resources, strengthen corporate governance, and respond faster to rising global demand for electricity, low‑carbon power generation materials, and EV-related products. The merger is also designed to accelerate group synergies, including expanding defense-related equipment production by leveraging M&E’s Muroran Plant, boosting in-house production capability, and concentrating technology development for GaN crystals to hasten their commercialization, thereby reinforcing JSW’s competitive position in both defense and advanced materials markets.

The most recent analyst rating on (JP:5631) stock is a Hold with a Yen10100.00 price target. To see the full list of analyst forecasts on Japan Steel Works stock, see the JP:5631 Stock Forecast page.

Japan Steel Works Reports Strong Financial Growth in First Half of 2025

Japan Steel Works reported a significant increase in its consolidated financial results for the six months ending September 30, 2025, with net sales rising by 25.3% and profit attributable to owners of the parent increasing by 67.9% year-on-year. The company’s strong performance is reflected in its improved equity-to-asset ratio and increased dividends, indicating a positive outlook for stakeholders.

The most recent analyst rating on (JP:5631) stock is a Hold with a Yen9187.00 price target. To see the full list of analyst forecasts on Japan Steel Works stock, see the JP:5631 Stock Forecast page.