Rococo Co. Ltd. (5868) AI Stock Analysis

• Market Cap: ¥4.08B
• Dividend Yield: 0.94%
• Average Volume (3M): 25.54K
• Price to Earnings (P/E): 10.0
• Beta (1Y): 0.67
• Revenue Growth: 14.35%
• EPS Growth: 105.59%
• Country: JP
• Employees: 677
• Sector: Technology
• Sector Strength: 88
• Industry: Information Technology Services
• EPS (TTM): 24.90
• Shares Outstanding: 3,727,100
• 10 Day Avg. Volume: 25,000
• 30 Day Avg. Volume: 25,543
• PEG Ratio: -0.30
• Price to Book (P/B): 0.97
• Price to Sales (P/S): 0.34
• P/FCF Ratio: 8.36
• 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: ¥1,364.00 ▲(36.95% Upside)

The score is driven primarily by solid financial health (low leverage, steady growth, and good cash conversion) and supportive valuation (low P/E with a meaningful dividend). Offsetting this, technical momentum appears overextended (very high RSI/Stoch), which raises near-term pullback risk despite a strong uptrend.

Positive Factors

Low Leverage / Strong Capital Base

A 0.21 debt-to-equity and 63% equity ratio indicate durable financial flexibility. Low leverage reduces refinancing and interest risk, enabling steady investment in R&D, product development, or acquisitions without stressing liquidity over the next several quarters.

Diversified, Recurring Revenue Model

Mix of direct product sales, retail/e-commerce partnerships and subscription services provides revenue diversification and recurring streams. This improves predictability of cash flow, customer lifetime value, and reduces reliance on single channels over a multi-month horizon.

Healthy Cash Conversion

Operating and free cash flow exceed reported net income, showing strong cash conversion. Consistent cash generation supports capex, working capital needs, dividends or buybacks and lowers dependence on external financing for sustainable operations.

Negative Factors

Low Net Profitability

Sub-4% net margin leaves limited buffer against input cost inflation or pricing pressure typical in consumer electronics. Persistently thin net margins can constrain internal reinvestment, limit free cash available for strategic initiatives, and depress long-term returns.

Volatile Free Cash Flow Growth

A very large year-over-year FCF jump suggests one-off timing or episodic cash swings. Such volatility weakens confidence in sustainable cash available for dividends, M&A or capex planning and raises execution risk when forecasting multi-quarter liquidity needs.

Margin Compression from Operating Costs

A sizable gap between gross (36%) and net margins implies operating expenses, SG&A, or R&D are eroding profitability. If cost control doesn't improve, scaling revenue may not translate into commensurate net income growth, limiting durable profitability improvement.

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

Solid overall fundamentals: revenue grew 8.76% YoY and the balance sheet is strong (debt-to-equity 0.21; equity ratio 63.34%). Profitability is positive but somewhat pressured, with net margin at 3.56% and EBIT margin at 5.47%. Cash generation is healthy (FCF/net income 1.15; OCF/net income 1.23), though recent FCF growth may be volatile.

Income Statement

Rococo Co. Ltd. has demonstrated consistent revenue growth with a 8.76% increase from 2023 to 2024. The gross profit margin stands at 36.42%, indicating strong profitability. However, the net profit margin decreased slightly to 3.56%, reflecting challenges in controlling costs or increased expenses. The EBIT margin is at 5.47%, showing moderate operational efficiency.

Balance Sheet

The company's balance sheet is robust with a debt-to-equity ratio of 0.21, indicating low leverage and financial stability. The equity ratio is 63.34%, suggesting a strong equity base relative to total assets. Return on equity is 10.11%, showing effective use of equity to generate profits.

Cash Flow

Rococo Co. Ltd. has a strong free cash flow to net income ratio of 1.15, indicating good cash generation relative to profits. The operating cash flow to net income ratio is 1.23, showing efficient cash flow management. However, free cash flow growth was 91.14%, reflecting significant improvement but with potential volatility.

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

Rococo Co. Ltd. Technical Analysis

• Technical Analysis Sentiment: Neutral
• Last Price: 996.00
• 50DMA: Positive
• 100DMA: Positive
• 200DMA: Positive
• MACD: Positive
• RSI: Neutral
• STOCH: Positive

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 1120.05, below the 50-day MA of 1018.44, and above the 200-day MA of 949.04, indicating a neutral trend. The MACD of 27.81 indicates Positive momentum. The RSI at 49.80 is Neutral, neither overbought nor oversold. The STOCH value of 6.90 is Positive, 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
4335	81 Outperform	¥2.91B	9.62	―	3.28%	9.68%	25.15%
5868	73 Outperform	¥4.08B	9.96	―	0.94%	14.35%	105.59%
4261	70 Outperform	¥6.05B	22.33	―	―	27.60%	-15.54%
Sector *	61 Neutral	$37.18B	12.37	-10.20%	1.83%	8.50%	-7.62%
5597	52 Neutral	¥6.69B	-14.58	―	―	-0.02%	-12.19%
5618	46 Neutral	¥2.65B	-9.17	―	―	23.63%	64.65%
5255	39 Underperform	¥10.99B	-3.20	―	―	-29.41%	79.74%