Japan Steel Works (5631) AI Stock Analysis

• Market Cap: ¥765.20B
• Dividend Yield: 1.03%
• Average Volume (3M): 946.71K
• Price to Earnings (P/E): 36.7
• Beta (1Y): 1.55
• Revenue Growth: 10.11%
• EPS Growth: 41.98%
• Country: JP
• Employees: 5,115
• Sector: Industrials
• Sector Strength: 72
• Industry: Industrial - Machinery
• EPS (TTM): 65.83
• 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: ¥10,422.28
• Price Target Upside: 1.98% Upside
• Rating Consensus: Moderate Buy
• Number of Analyst Covering: 2
• EPS Forecast (FY): 268.77
• Revenue Forecast (FY): ¥294.88B

• Rating: 59 Neutral
• Price Target: ¥10,685.00 ▲(4.55% Upside)
• Action: Reiterated Date: 12/03/25
• Date: Action: Reiterated 12/03/25

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

Revenue growth & operational efficiency

Sustained revenue growth (Fundamentals + FinancialSummary) indicates expanding order wins and stronger utilization of specialized manufacturing capacity. Over 2-6 months this supports steadier backlog conversion, better fixed-cost absorption, and a more resilient core earnings base for made-to-order heavy industrial products.

Healthy gross and improved operating margins

Relatively strong gross margins and rising EBIT/EBITDA margins reflect durable manufacturing scale, pricing power on engineered products, and improved operational control. These margin levels provide a structural cushion to absorb cyclical revenue swings and fund reinvestment without immediately eroding profitability.

Prudent balance sheet and low leverage

Low leverage and a strong equity ratio give the company durable financial flexibility to invest in long-lead projects, weather industry cycles, and access financing if needed. This capital structure reduces refinancing risk and supports steady execution of capital-intensive manufacturing programs.

Negative Factors

Negative free cash flow / cash generation

A sharp swing to negative free cash flow signals structural pressure on the company's ability to self-fund capex, working capital needs, and shareholder returns. Persistently negative FCF over months can force external financing, constrain strategic investments, and increase liquidity vulnerability.

Poor cash conversion from earnings

Negative conversion of net income into operating cash suggests receivables, inventory build, or timing in long-project billing. Over the medium term this undermines balance sheet resilience, raises working capital requirements, and can amplify funding needs during order up/down cycles.

End-market cyclicality and long lead-time project risk

Heavy reliance on cyclical industries and long-lead bespoke contracts increases revenue volatility and execution risk. Structurally, this can create lumpy earnings, higher working capital swings, and dependence on winning large tenders, reducing predictability of cash flows and near-term backlog conversion.

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	Mar 2026	Mar 2025	Mar 2024	Mar 2023	Mar 2022
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: Positive
• Last Price: 10220.00
• 50DMA: Positive
• 100DMA: Positive
• 200DMA: Positive
• MACD: Negative
• RSI: Neutral
• STOCH: Negative

Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For JP:5631, the sentiment is Positive. The current price of 10220 is above the 20-day moving average (MA) of 9515.55, above the 50-day MA of 8952.78, and above the 200-day MA of 8718.77, indicating a bullish trend. The MACD of 310.11 indicates Negative momentum. The RSI at 64.72 is Neutral, neither overbought nor oversold. The STOCH value of 84.61 is Negative, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Positive sentiment for JP:5631.

Japan Steel Works Peers Comparison

Name	Overall Rating	Market Cap	P/E Ratio	ROE	Dividend Yield	Revenue Growth	EPS Growth
6118	74 Outperform	¥64.67B	12.89	―	2.54%	2.00%	39.80%
6113	72 Outperform	¥842.63B	27.50	5.14%	3.31%	-1.14%	-19.79%
6508	71 Outperform	¥360.23B	15.98	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	¥765.20B	36.66	11.66%	1.03%	10.11%	41.98%
6302	59 Neutral	¥769.44B	23.98	0.59%	2.95%	-2.67%	-85.21%

Japan Steel Works Corporate Events

Japan Steel Works Unveils Major Reorganization to Drive Global Growth and Advanced Materials Strategy

Japan Steel Works will overhaul its organization on April 1, 2026 to advance its JGP2028 plan, which targets both sustainability goals and substantial sales growth by strengthening existing businesses and nurturing new ones. The restructuring is designed to support a recycling-oriented plastics economy, a low-carbon energy mix and a super-smart society, aligning operational structures with long-term strategic priorities.

The company will create a Global Strategy Headquarters to drive international expansion of its plastics and industrial machinery operations, tightening oversight of overseas subsidiaries and regional strategy execution. It will also launch a Plastics Machinery Solutions division to integrate after-sales services across its plastics machinery portfolio, aiming to boost customer satisfaction, ensure stable operations and support new low-carbon applications.

A new Materials and Engineering Business Division will be formed as the firm absorbs its wholly owned unit Japan Steel Works M&E, with the Muroran plant designated as the main manufacturing hub for this segment. This unit will focus on meeting growing demand for materials used in nuclear and high-efficiency thermal power generation amid energy security concerns and the rapid spread of AI, reinforcing governance and intra-group synergies.

To accelerate growth in advanced photonics, JSW will carve out its semiconductor and optical device materials operations into a dedicated Photonics Office, targeting future core-business status for GaN and LN-based products. The existing New Business Promotion Headquarters will be dissolved, with commercialization functions moved to the Innovation Management Headquarters and parts of the composite materials business folded into the new Materials and Engineering division, streamlining innovation and governance structures.

The most recent analyst rating on (JP:5631) stock is a Hold with a Yen9981.00 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 Overhauls Board and Executive Lineup to Sharpen Segment Focus

The Japan Steel Works, Ltd. announced a broad reshuffle of its board and executive ranks, effective April 1, 2026, aimed at clarifying responsibilities across finance, export control, quality, digital transformation and key business segments. Representative Director and Executive Vice President Hiroki Kikuchi will relinquish oversight of the Materials and Engineering Business Segment, while other directors, including CTO Shigeki Inoue and CISO Seiji Umamoto, see their delegated tasks narrowed to focus more tightly on quality, intellectual property, new business and information functions.

On the executive side, several officers are promoted or reassigned, with expanded leadership given to ordnance and plastics machinery businesses and to global strategy. New executive officers will take charge of major plants and core divisions such as plastics machinery solutions, injection molding and materials and engineering, signaling a reorganization intended to strengthen operational control, accelerate global expansion and enhance segment-focused management within the group.

The most recent analyst rating on (JP:5631) stock is a Hold with a Yen9981.00 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 Lifts Nine-Month Profit and Keeps Full-Year Forecast on Track

Japan Steel Works reported consolidated net sales of ¥201.1 billion for the nine months ended December 31, 2025, up 16.4% year on year, with operating profit edging up 2.9% to ¥17.5 billion and profit attributable to owners of the parent rising 20.7% to ¥14.9 billion. The company’s equity-to-asset ratio improved to 49.3% as total assets and net assets both increased, underscoring a stronger balance sheet.

Basic earnings per share climbed to ¥202.94 from ¥168.18 a year earlier, reflecting solid profit growth despite only modest gains in operating profit. For the full fiscal year ending March 31, 2026, Japan Steel Works maintained its forecast of ¥290 billion in net sales and ¥18.5 billion in profit attributable to owners of the parent, and plans an annual dividend of ¥88 per share, signaling stable shareholder returns and confidence in its earnings outlook.

The most recent analyst rating on (JP:5631) stock is a Hold with a Yen9981.00 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 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.