Otani Kogyo Co., Ltd. (5939) AI Stock Analysis

• Market Cap: ¥4.25B
• Dividend Yield: 0.55%
• Average Volume (3M): 1.71K
• Price to Earnings (P/E): 11.2
• Beta (1Y): 0.72
• Revenue Growth: -3.52%
• EPS Growth: -32.97%
• Country: JP
• Employees: 177
• Sector: Industrials
• Sector Strength: 72
• Industry: Electrical Equipment & Parts
• EPS (TTM): 144.46
• Shares Outstanding: 780,000
• 10 Day Avg. Volume: 520
• 30 Day Avg. Volume: 1,713
• PEG Ratio: 1.23
• Price to Book (P/B): 1.17
• Price to Sales (P/S): 0.61
• P/FCF Ratio: 11.17
• 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: 63 Neutral
• Price Target: ¥6,401.00 ▲(23.57% Upside)
• Action: Reiterated Date: 03/05/26
• Date: Action: Reiterated 03/05/26

Overall score is driven primarily by mixed financial performance—especially weak TTM cash conversion and negative free cash flow—partly offset by a conservatively levered balance sheet and continued profitability. Technicals are moderately supportive (longer-term uptrend but below the 20-day average), and valuation looks reasonable with a low-teens P/E.

Positive Factors

Conservative balance sheet

Low leverage and an expanding equity base provide durable financial flexibility. With debt-to-equity well below 0.2x and equity growth over time, the company is better positioned to absorb shocks, fund opportunistic capex or M&A, and maintain operations without immediate refinancing risk.

Consistent profitability

Sustained mid-single-digit operating margins and a history of profitability create a stable earnings base. That durability supports reinvestment, modest shareholder distributions, and gives management time to address growth or efficiency initiatives without cash losses eroding core operations.

Lower market volatility (low beta)

A beta around 0.72 signals lower sensitivity to market swings, helping preserve equity value through cycles. Lower volatility can reduce financing premium expectations and aids multi‑period planning, making long-term capital allocation and strategic decisions less exposed to short-term market noise.

Negative Factors

Negative TTM free cash flow

Negative trailing‑twelve‑month free cash flow and weak cash conversion are structural concerns for durability. Persistent FCF deficits constrain internal funding for capex, dividends, or debt reduction, raising reliance on external financing and increasing execution risk if working capital issues persist.

Stalled / declining revenue

TTM revenue down modestly signals demand or market share challenges. Without top-line growth, the company has limited ability to leverage fixed costs or expand margins, which can hamper long-term return profiles and reduce resources available for strategic investments.

Margin erosion

Compression of gross, operating, and net margins versus the prior annual period reduces earnings resilience. Sustained margin pressure lowers free cash flow potential and ROE, making it harder to finance growth or absorb cost shocks without further structural changes to pricing or cost base.

Otani Kogyo Co., Ltd. Business Overview & Revenue Model

Company Description

Otani Kogyo Co., Ltd. (5939) is a Japanese company primarily engaged in the manufacturing and sales of various types of industrial equipment and materials. The company specializes in the production of high-quality steel pipes, valves, and fittings used across multiple sectors, including construction, infrastructure, and energy. Otani Kogyo is known for its innovation in product design and commitment to quality, serving a diverse clientele both domestically and internationally.

How the Company Makes Money

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Otani Kogyo Co., Ltd. Financial Statement Overview

Summary

Mixed fundamentals: profitability remains positive with mid-single-digit operating margins and low leverage, but TTM revenue is slightly down, margins have softened versus the latest annual period, and TTM free cash flow has turned negative with weak cash conversion.

Income Statement

TTM (Trailing-Twelve-Months) revenue is slightly down versus the prior annual period, indicating growth has stalled after stronger gains earlier in the cycle. Profitability remains positive but has softened: gross, operating, and net margins in TTM are below the latest annual levels, suggesting some mix/price or cost pressure. Offsetting this, the company still generates a mid-single-digit operating margin and remains consistently profitable across the history provided.

Balance Sheet

The balance sheet looks conservatively positioned with low leverage (debt-to-equity remains well below 0.2x in both the latest annual period and TTM). Equity has grown over time, and returns on equity are steady in the high-single-digit range (slightly lower in TTM versus the latest annual report). A watch item is that total debt has stepped up from earlier years, but leverage is still modest relative to the equity base.

Cash Flow

Cash generation is the weakest area. While the latest annual period showed solid positive free cash flow, TTM (Trailing-Twelve-Months) free cash flow has turned negative and operating cash flow is low relative to reported earnings, signaling working-capital or timing headwinds. The track record is also uneven with multiple years of negative free cash flow, which raises execution risk if weaker cash conversion persists.

Breakdown	TTM	Mar 2025	Mar 2024	Mar 2023	Mar 2022	Mar 2021
Income Statement
Total Revenue	7.66B	7.90B	7.91B	7.19B	6.41B	6.06B
Gross Profit	1.55B	1.72B	1.55B	1.29B	1.23B	1.33B
EBITDA	543.64M	606.68M	587.22M	402.64M	352.84M	482.74M
Net Income	271.35M	369.16M	334.57M	173.88M	127.00M	206.57M
Balance Sheet
Total Assets	7.93B	7.56B	7.19B	6.23B	5.49B	5.34B
Cash, Cash Equivalents and Short-Term Investments	1.53B	1.91B	1.56B	1.16B	1.23B	1.52B
Total Debt	780.02M	478.52M	525.77M	48.00M	48.00M	48.00M
Total Liabilities	3.59B	3.49B	3.46B	2.84B	2.26B	2.21B
Stockholders Equity	4.34B	4.08B	3.73B	3.38B	3.23B	3.13B
Cash Flow
Free Cash Flow	-305.30M	428.38M	-70.72M	-42.59M	-273.54M	116.09M
Operating Cash Flow	122.21M	783.41M	183.99M	112.25M	56.95M	336.18M
Investing Cash Flow	-418.63M	-356.69M	-241.34M	-150.96M	-325.00M	-217.00M
Financing Cash Flow	58.02M	-74.36M	451.09M	-23.39M	-28.92M	-32.63M

Otani Kogyo Co., Ltd. Technical Analysis

• Technical Analysis Sentiment: Negative
• Last Price: 5180.00
• 50DMA: Negative
• 100DMA: Negative
• 200DMA: Negative
• MACD: Positive
• RSI: Neutral
• STOCH: Positive

Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For JP:5939, the sentiment is Negative. The current price of 5180 is below the 20-day moving average (MA) of 7853.00, below the 50-day MA of 7431.80, and below the 200-day MA of 5915.75, indicating a bearish trend. The MACD of -448.26 indicates Positive momentum. The RSI at 31.04 is Neutral, neither overbought nor oversold. The STOCH value of 1.80 is Positive, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Negative sentiment for JP:5939.

Otani Kogyo Co., Ltd. Peers Comparison

Name	Overall Rating	Market Cap	P/E Ratio	ROE	Dividend Yield	Revenue Growth	EPS Growth
6643	85 Outperform	¥28.80B	6.42	―	3.12%	6.60%	0.27%
5819	75 Outperform	¥13.11B	10.63	―	3.02%	3.43%	3.75%
6637	72 Outperform	¥51.07B	12.37	―	0.91%	5.28%	18.38%
Sector *	63 Neutral	$10.79B	15.43	7.44%	2.01%	2.89%	-14.66%
5939	63 Neutral	¥4.25B	11.25	―	0.55%	-3.52%	-32.97%
6905	59 Neutral	¥51.04B	195.39	―	5.01%	-32.74%	-117.06%
6943	51 Neutral	¥4.04B	7.18	―	1.79%	-10.43%	-368.47%