Rococo Co. Ltd. (5868) AI Stock Analysis

• Market Cap: ¥3.90B
• Dividend Yield: 0.94%
• Average Volume (3M): 25.54K
• Price to Earnings (P/E): 12.3
• Beta (1Y): 0.70
• 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 strengthening in operating and free cash flow in 2025 means the company now generates reliable internal funding for capex, dividends and debt servicing. High free cash flow alignment with net income (~0.97) improves financial flexibility and reduces dependence on external financing over the medium term.

Steady revenue growth

Consistent top-line growth (~10% YoY in 2025) indicates sustained demand for the company’s services and supports scale economies. Over 2–6 months this momentum underpins predictable cash flows, helps absorb cost variability, and strengthens bargaining position with clients and partners.

Manageable leverage

A low debt-to-equity ratio (~0.26) and strengthening equity balance improve solvency and reduce refinancing risk. This healthier balance sheet supports strategic investments or dividend policy without materially raising financial distress probability over the medium term.

Negative Factors

Eroding gross margins

A multi-year decline in gross margin signals structural pressure on core profitability, whether from pricing, cost of service, or mix shifts. Persistently lower gross margins constrain operating leverage, reduce cash generation per revenue dollar, and limit room for reinvestment or margin recovery.

Thin net margins

Modest net margins leave limited buffer against economic downturns or cost shocks and limit retained earnings growth. Over several quarters this restricts capacity to self-fund expansion, pay higher dividends, or accumulate meaningful reserves compared with higher-margin peers.

Cash intensity vs revenue

Relatively low operating cash flow yield on revenue and historical volatility imply earnings are less cash-convertible than desirable. That can limit sustainable reinvestment and heighten sensitivity to working-capital swings, increasing execution risk during growth or macro stress 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	710.87M	588.77M	494.93M	558.99M	819.62M	523.06M
Net Income	461.51M	317.73M	278.02M	289.00M	453.13M	322.75M
Balance Sheet
Total Assets	4.28B	5.00B	4.35B	4.39B	3.27B	3.05B
Cash, Cash Equivalents and Short-Term Investments	1.63B	1.94B	1.93B	2.14B	1.28B	1.18B
Total Debt	463.84M	758.45M	580.42M	1.21B	1.32B	1.54B
Total Liabilities	1.46B	2.04B	1.60B	2.08B	2.20B	2.44B
Stockholders Equity	2.82B	2.96B	2.75B	2.31B	1.07B	611.32M
Cash Flow
Free Cash Flow	0.00	648.32M	325.98M	173.83M	424.05M	330.52M
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: 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 1101.45, below the 50-day MA of 1109.56, and above the 200-day MA of 993.75, indicating a neutral trend. The MACD of -15.40 indicates Positive momentum. The RSI at 40.50 is Neutral, neither overbought nor oversold. The STOCH value of 16.83 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
5868	73 Outperform	¥3.90B	12.28	―	0.94%	14.35%	105.59%
3625	65 Neutral	¥4.32B	10.29	―	1.20%	26.70%	93.41%
2375	64 Neutral	¥4.35B	-18.12	―	0.94%	-12.25%	―
Sector *	61 Neutral	$37.18B	12.37	-10.20%	1.83%	8.50%	-7.62%
5250	60 Neutral	¥3.88B	37.94	―	1.74%	―	―
2493	57 Neutral	¥4.43B	7.68	―	0.53%	17.13%	-41.14%
2338	42 Neutral	¥9.45B	-5.25	―	―	―	―