Rococo Co. Ltd. (5868) AI Stock Analysis

• Market Cap: ¥4.00B
• Dividend Yield: 0.94%
• Average Volume (3M): 25.54K
• Price to Earnings (P/E): 12.3
• Beta (1Y): 0.68
• Revenue Growth: 14.35%
• EPS Growth: 105.59%
• Country: JP
• Employees: 677
• Sector: Technology
• Sector Strength: 88
• Industry: Information Technology Services
• EPS (TTM): 7.99
• Shares Outstanding: 3,727,100
• 10 Day Avg. Volume: 25,000
• 30 Day Avg. Volume: 25,543
• PEG Ratio: 0.90
• Price to Book (P/B): 1.32
• Price to Sales (P/S): 0.42
• P/FCF Ratio: 6.02
• 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: 73 Outperform
• Price Target: ¥1,221.00 ▲(22.59% Upside)
• Action: Reiterated Date: 02/18/26
• Date: Action: Reiterated 02/18/26

The score is primarily supported by improving cash generation, steady revenue growth, and a healthier balance sheet, with valuation also favorable given the moderate P/E and ~3.2% dividend yield. Offsetting these positives are compressed margins and only mixed/neutral technical momentum.

Positive Factors

Improving cash generation

Material improvement in operating and free cash flow in 2025 provides durable funding for capex, dividends, debt reduction, and strategic investment. Free cash flow tracking net income (~0.97) suggests earnings quality, reducing reliance on external financing and improving financial flexibility.

Steady revenue growth

Consistent top-line growth indicates sustained demand for products and services across retail, commercial, and subscription channels. This steady growth supports scale advantages, recurring revenue expansion from subscriptions, and a more predictable revenue base for multi‑year planning and investment.

Improved balance-sheet leverage

Lower debt-to-equity and rising equity indicate stronger balance-sheet resilience versus prior years. Manageable leverage increases strategic optionality, lowers refinancing risk, and supports investment or dividend policies without materially raising financial stress during cyclical downturns.

Negative Factors

Compressing gross margins

A multi-year decline in gross margin signals structural pressure from pricing, input costs, or product mix shifts. Persistent margin erosion reduces operating leverage, limits incremental profit from revenue growth, and makes sustainable margin recovery necessary for materially stronger cash generation.

Thin net profitability

Low net margins leave limited buffer against cost shocks and reduce retained earnings available for reinvestment. With net margin in the low single digits, the company is more sensitive to revenue volatility and less able to self-fund large strategic initiatives without improving operating efficiency.

Modest and volatile cash conversion

OCF under 10% of revenue implies modest cash conversion; prior volatility indicates earnings-to-cash reliability risks. Durable plans depend on consistent cash generation; variability could constrain capital allocation, force tradeoffs between capex, dividends, and debt paydown in weaker periods.

Rococo Co. Ltd. Business Overview & Revenue Model

Company Description

Rococo Co. Ltd. is an IT consulting services company. The company provides IT outsourcing services, including PC-life cycle management support, helpdesk, kitting, infrastructure and network configuration, and resident engineer services; DX promotion support services; BPO services; and system development, maintenance, and introduction support services. It also offers AUTH thru, a face recognition access control system; AUTH thru KEY, a system that links an electric lock to the facial recognition entrance and exit control system; RocoTime, an attendance management system; tike-series, a ticketing system; and Re-tass LIVE for one-to-one online streaming services. The company was founded in 1994 and is based in Osaka, Japan.

How the Company Makes Money

Rococo Co. Ltd. generates revenue through multiple channels, including direct sales of its electronic products to consumers and businesses, as well as through partnerships with major retailers and e-commerce platforms. The company also benefits from recurring revenue streams through subscription services associated with its smart devices, providing users with software updates and premium features. Additionally, Rococo Co. Ltd. engages in collaborations with technology firms, enhancing its product offerings and expanding its market reach. The combination of product sales, subscription services, and strategic partnerships forms the core of the company's revenue model.

Rococo Co. Ltd. Financial Statement Overview

Summary

Steady revenue growth (2025 up ~10% vs. 2024) and a meaningful improvement in operating/free cash flow in 2025 support the score. Balance sheet leverage is currently manageable (debt-to-equity ~0.26), but profitability is a constraint: gross margin has drifted down since 2022 and net margin remains thin (~3–4%).

Income Statement

Revenue has grown steadily from 2023 to 2025 (2025 up ~10% vs. 2024), showing solid demand momentum. Profitability is positive but has cooled versus 2022: gross margin has drifted down (about 38% in 2022 to ~34% in 2025) and net margin is modest (~3–4% in 2024–2025). Operating profitability is stable in the mid-single digits, but the lower margin profile in recent years limits the score despite good top-line growth.

Balance Sheet

Leverage looks manageable in the most recent year, with debt to equity at ~0.26 in 2025 and equity growing versus prior years, indicating improved balance-sheet resilience. Total debt is up in 2025 versus 2024, but remains moderate relative to equity and assets. Earlier years showed meaningfully higher leverage (notably 2021–2022), which suggests the balance sheet has improved but still carries a historical risk backdrop.

Cash Flow

Cash generation strengthened materially in 2025, with operating cash flow (~666M) and free cash flow (~648M) both well above 2024 levels. Free cash flow closely tracks reported earnings (free cash flow to net income ~0.97 in 2025), which is a positive quality signal. The main weakness is that cash flow relative to revenue is not especially high (operating cash flow as a share of revenue is under 10%), and cash flow was more volatile in 2023, but the recent trajectory is clearly favorable.

Breakdown	TTM	Dec 2025	Dec 2024	Dec 2023	Dec 2022	Dec 2021
Income Statement
Total Revenue	8.34B	9.19B	7.80B	7.18B	6.93B	6.30B
Gross Profit	3.10B	3.14B	2.84B	2.67B	2.66B	2.16B
EBITDA	744.60M	588.77M	494.00M	540.21M	820.29M	550.32M
Net Income	462.18M	317.73M	278.02M	289.46M	453.13M	322.75M
Balance Sheet
Total Assets	4.28B	5.00B	4.34B	4.38B	3.26B	3.03B
Cash, Cash Equivalents and Short-Term Investments	1.63B	1.94B	1.93B	2.14B	1.28B	1.18B
Total Debt	479.84M	758.45M	574.80M	1.19B	1.28B	1.54B
Total Liabilities	1.46B	2.04B	1.59B	2.07B	2.19B	2.42B
Stockholders Equity	2.82B	2.96B	2.75B	2.31B	1.07B	611.32M
Cash Flow
Free Cash Flow	0.00	648.32M	319.44M	167.09M	415.35M	321.88M
Operating Cash Flow	0.00	665.99M	341.56M	185.31M	443.09M	353.19M
Investing Cash Flow	0.00	-615.00M	-83.57M	-146.95M	-54.02M	-48.39M
Financing Cash Flow	0.00	-70.34M	-519.45M	775.57M	-287.55M	-280.12M

Rococo Co. Ltd. Technical Analysis

• Technical Analysis Sentiment: Neutral
• Last Price: 996.00
• 50DMA: Negative
• 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:5868, the sentiment is Neutral. The current price of 996 is below the 20-day moving average (MA) of 1112.75, below the 50-day MA of 1102.83, and above the 200-day MA of 984.82, indicating a neutral trend. The MACD of 7.24 indicates Positive momentum. The RSI at 45.83 is Neutral, neither overbought nor oversold. The STOCH value of 35.25 is Neutral, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Neutral sentiment for JP:5868.

Rococo Co. Ltd. Peers Comparison

Name	Overall Rating	Market Cap	P/E Ratio	ROE	Dividend Yield	Revenue Growth	EPS Growth
5868	73 Outperform	¥4.00B	12.28	―	0.94%	14.35%	105.59%
3625	65 Neutral	¥4.63B	10.29	―	1.20%	26.70%	93.41%
2375	62 Neutral	¥4.21B	16.25	―	0.94%	-12.25%	―
Sector *	61 Neutral	$37.18B	12.37	-10.20%	1.83%	8.50%	-7.62%
5250	60 Neutral	¥3.99B	49.52	―	1.74%	―	―
2493	57 Neutral	¥4.45B	28.31	―	0.53%	17.13%	-41.14%
2338	43 Neutral	¥5.02B	-5.25	―	―	―	―