Disco (6146) AI Stock Analysis

• Market Cap: $4.15T
• Dividend Yield: 0.98%
• Average Volume (3M): 3.51M
• Price to Earnings (P/E): 33.4
• Beta (1Y): 1.52
• Revenue Growth: 19.04%
• EPS Growth: 30.11%
• Country: JP
• Employees: 4,886
• Sector: Technology
• Sector Strength: 81
• Industry: Semiconductors
• EPS (TTM): 219.23
• Shares Outstanding: 108,433,650
• 10 Day Avg. Volume: 3,360,550
• 30 Day Avg. Volume: 3,511,533
• PEG Ratio: N/A
• Price to Book (P/B): N/A
• Price to Sales (P/S): N/A
• P/FCF Ratio: N/A
• Enterprise Value/Market Cap: 1.07
• Enterprise Value/Revenue: 11.78
• Enterprise Value/Gross Profit: 16.77
• Enterprise Value/Ebitda: 26.40
• 1Y Price Target: $50,029.62
• Price Target Upside: 32.60% Upside
• Rating Consensus: Moderate Buy
• Number of Analyst Covering: 7

• Rating: 73 Outperform
• Price Target: ―

Disco exhibits strong financial fundamentals, with impressive revenue growth and a robust balance sheet characterized by zero debt. Despite the solid financial performance, technical indicators highlight a bearish trend with the stock trading below key moving averages and negative momentum signals. The stock's valuation appears fair, with a moderate P/E ratio and a modest dividend yield. These mixed factors lead to an overall score that reflects strong financial health but tempered by current market sentiment.

Disco Business Overview & Revenue Model

Company Description

Disco Corporation manufactures and sells precision cutting, grinding, and polishing machines in Japan and internationally. The company's precision machines include dicing saws, laser saws, grinders, polishers, wafer mounters, die separators, surface planers, and waterjet saws, as well as products for dicing before grinding process and package singulation. It also offers precision processing tools comprising dicing blades, grinding wheels, and dry polishing wheels; and other products, such as accessory equipment, as well as frames and cassettes, and additives for cutting waters. In addition, the company is involved in the disassembly and recycling of precision cutting, grinding, and polishing machines, as well as provides training services for the maintenance and operation of its products. Further, it leases precision machines; and purchases and sells used machines. The company was founded in 1937 and is headquartered in Tokyo, Japan.

How the Company Makes Money

Disco Corporation primarily generates revenue through the sale of its precision processing equipment and consumables. The company's key revenue streams include the sale of dicing saws, grinders, and polishing machines, which are critical for semiconductor and electronic component manufacturing. Additionally, Disco earns significant income from consumables like blades and wheels that are used with their machines. The company also provides maintenance and support services, which contribute to its earnings. Partnerships with semiconductor manufacturers and continuous innovation in processing technology play a crucial role in sustaining Disco's revenue growth.

Disco Financial Statement Overview

Summary

Disco is in a strong financial position with impressive revenue growth and profitability. The company's balance sheet shows excellent financial health with no debt and a high equity ratio, minimizing financial risk. While cash flow generation remains strong, the recent decline in operating cash flow warrants attention. Overall, Disco is well-positioned for continued growth and stability in the semiconductor industry.

Income Statement

Disco demonstrates remarkable growth with a TTM revenue of ¥376.9 billion, reflecting a substantial increase from ¥253.8 billion in 2022. Gross profit margin is strong at 70.2%, and the net profit margin is impressive at 32.0%, indicating efficient cost management and strong profitability. EBIT and EBITDA margins are also robust at 42.8% and 44.6% respectively, showcasing operational efficiency.

Balance Sheet

The company maintains a solid balance sheet with zero debt, resulting in a debt-to-equity ratio of 0. The equity ratio is strong at 72.2%, highlighting financial stability. Return on equity stands at 26.6%, indicating effective use of equity to generate profits. The absence of debt and high equity ratio reduces financial risk significantly.

Cash Flow

Operating cash flow is robust at ¥28 billion, with a healthy free cash flow of ¥23.7 billion. The free cash flow to net income ratio is healthy, indicating strong cash generation relative to profits. However, there is a noticeable decline in operating cash flow compared to previous years, which could be monitored for potential liquidity risks.

Breakdown	Dec 2024	Dec 2023	Dec 2022	Dec 2021	Dec 2020
Income Statement
Total Revenue	393.31B	307.55B	284.13B	253.78B	182.86B
Gross Profit	277.45B	208.64B	184.51B	154.01B	106.88B
EBITDA	180.34B	132.49B	120.78B	100.06B	59.87B
Net Income	123.89B	84.20B	82.89B	66.21B	39.09B
Balance Sheet
Total Assets	654.09B	556.06B	468.80B	404.54B	329.03B
Cash, Cash Equivalents and Short-Term Investments	229.17B	215.49B	163.05B	125.77B	109.81B
Total Debt	0.00	0.00	0.00	0.00	0.00
Total Liabilities	161.38B	149.50B	120.76B	110.73B	76.67B
Stockholders Equity	492.36B	406.37B	347.80B	293.54B	252.14B
Cash Flow
Free Cash Flow	52.41B	81.27B	67.53B	40.02B	35.60B
Operating Cash Flow	120.36B	97.52B	81.78B	83.65B	56.71B
Investing Cash Flow	-68.00B	-16.40B	-13.08B	-43.59B	-13.11B
Financing Cash Flow	-38.15B	-30.94B	-32.09B	-27.19B	-15.82B

Disco Technical Analysis

• Technical Analysis Sentiment: Negative
• Last Price: 37730.00
• 50DMA: Negative
• 100DMA: Positive
• 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:6146, the sentiment is Negative. The current price of 37730 is below the 20-day moving average (MA) of 39985.50, below the 50-day MA of 41684.60, and below the 200-day MA of 38522.38, indicating a bearish trend. The MACD of -940.85 indicates Positive momentum. The RSI at 39.44 is Neutral, neither overbought nor oversold. The STOCH value of 18.13 is Positive, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Negative sentiment for JP:6146.

Disco Peers Comparison

Name	Overall Rating	Market Cap	P/E Ratio	ROE	Dividend Yield	Revenue Growth	EPS Growth
6146	73 Outperform	$4.15T	33.45	28.07%	0.98%	19.04%	30.11%
Sector *	61 Neutral	$35.56B	9.00	-10.49%	1.86%	8.45%	-8.32%
ADTTF	―	$57.02B	37.16	44.94%	0.32%	―	―
DINRF	―	$6.65B	11.32	24.92%	2.74%	―	―
LSRCF	―	$9.58B	16.86	47.47%	2.02%	―	―
RNECF	―	$20.07B	20.80	-4.72%	1.51%	―	―
3436	68 Neutral	¥444.89B	42.95		1.24%	0.04%	-61.48%

Disco Corporate Events

Disco Corporation Announces Dividend Payout for Fiscal Year 2024

Disco Corporation announced a resolution to distribute surplus earnings as dividends, with a total year-end dividend of 289 yen per share, bringing the total annual dividend to 413 yen. This decision aligns with their performance-linked dividend policy, aiming to prioritize shareholder returns by setting a target payout ratio of 25% of consolidated net income and adding surplus cash to dividends, reflecting a stable financial strategy.