Disco (6146) AI Stock Analysis

• Market Cap: ¥8.12T
• Dividend Yield: 0.79%
• Average Volume (3M): 4.03M
• Price to Earnings (P/E): 62.3
• Beta (1Y): 1.48
• Revenue Growth: 13.45%
• EPS Growth: 20.37%
• Country: JP
• Employees: 4,886
• Sector: Technology
• Sector Strength: 88
• Industry: Semiconductors
• EPS (TTM): 338.72
• Shares Outstanding: 108,478,030
• 10 Day Avg. Volume: 3,686,180
• 30 Day Avg. Volume: 4,033,456
• PEG Ratio: 0.55
• Price to Book (P/B): 6.58
• Price to Sales (P/S): 8.24
• P/FCF Ratio: 61.81
• 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: ¥67,047.44
• Price Target Upside: -11.20% Downside
• Rating Consensus: Strong Buy
• Number of Analyst Covering: 4
• EPS Forecast (FY): 1,197.48
• Revenue Forecast (FY): ¥424.78B

• Rating: 75 Outperform
• Price Target: ¥84,938.00 ▲(12.50% Upside)
• Action: Reiterated Date: 01/23/26
• Date: Action: Reiterated 01/23/26

The score is driven primarily by outstanding profitability and a very low-risk, debt-free balance sheet. Strong technical uptrend supports the rating, but overbought indicators and a rich valuation (high P/E with a low yield) meaningfully temper the overall score.

Positive Factors

Exceptional profitability

Very high and improving margins indicate durable pricing power and operational efficiency. Sustained gross and operating margins provide strong internal funding for R&D and capex, support shareholder returns, and create a structural buffer through industry cycles.

Debt-free, high-quality balance sheet

A zero-debt, equity-rich balance sheet materially lowers financial risk and preserves resilience during downturns. Strong ROE shows efficient capital use, enabling strategic investments from retained capital without refinancing risk, supporting long-term stability.

Solid cash generation

Consistent positive operating and free cash flow gives the company durable self-funding capacity for capex, tooling and R&D. Reliable cash generation supports investment and return programs even if external financing markets tighten.

Negative Factors

Slowing revenue growth

Top-line deceleration to mid-single digits reduces the pace at which profits can compound. Over the medium term this suggests greater sensitivity to end-market cycles and makes sustaining absolute profit expansion harder despite high margins.

Inconsistent cash conversion

Variation between earnings and cash flow, plus a notable FCF decline, signals working-capital swings or higher reinvestment needs. Over months this can constrain discretionary spending and reduce predictability of cash available for strategic uses.

Low leverage limits growth optionality

A very conservative capital structure reduces risk but can impede rapid scale-ups or large M&A without diluting equity or building cash. Over the medium term this may slow capacity expansion when market opportunity requires faster capital deployment.

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

Financials are very strong overall: exceptional profitability (FY2025 gross margin ~71%, operating margin ~43%, net margin ~31%) and a fortress, debt-free balance sheet with strong ROE (~25%). The main offsets are slowing recent revenue growth (~4.4% in FY2025) and less consistent cash conversion, including a step-down in FY2025 free cash flow (~¥52B).

Income Statement

Disco shows very strong profitability and a healthy growth trajectory. Revenue expanded meaningfully from FY2020 to FY2025 (annual), with FY2025 growth still positive (~4.4%). Profitability is exceptional for the sector: gross margin rose from ~58% (FY2020) to ~71% (FY2025), while operating profit margin improved to ~43% and net margin to ~31% in FY2025. The main weakness is the visible deceleration in recent revenue growth versus earlier years, which suggests results may be more cycle-sensitive from here.

Balance Sheet

The balance sheet is extremely conservative and high quality. The company reports no debt across the provided years, with equity steadily compounding alongside rising assets (equity ~¥492B vs assets ~¥654B in FY2025). Returns on equity are consistently strong (~16% to ~25% range, ~25% in FY2025), indicating efficient capital use despite a very low-leverage structure. The key trade-off is that a debt-free structure can limit financial flexibility for aggressive expansion, but overall risk is very low.

Cash Flow

Cash generation is solid but less consistent than earnings. Operating cash flow is sizable (FY2025 ~¥120B) and generally tracks profitability; however, cash conversion is not consistently strong, with operating cash flow running below net income in the provided years (coverage ~0.66–0.76). Free cash flow is positive each year and grew sharply in FY2024, but it fell in FY2025 (to ~¥52B) and free cash flow relative to net income dropped to ~0.44, suggesting heavier reinvestment and/or working-capital drag. Overall, cash flow remains healthy, but the variability is the main watch item.

Breakdown	TTM	Mar 2026	Mar 2025	Mar 2024	Mar 2023	Mar 2022
Income Statement
Total Revenue	400.43B	393.31B	307.55B	284.13B	253.78B	182.86B
Gross Profit	281.02B	277.45B	208.60B	184.47B	153.97B	106.83B
EBITDA	178.39B	180.34B	125.61B	123.16B	100.80B	60.25B
Net Income	123.94B	123.89B	84.21B	82.89B	66.21B	39.09B
Balance Sheet
Total Assets	620.08B	654.09B	560.42B	472.69B	404.54B	329.03B
Cash, Cash Equivalents and Short-Term Investments	198.50B	229.17B	215.49B	163.05B	125.77B	109.81B
Total Debt	0.00	0.00	0.00	0.00	0.00	0.00
Total Liabilities	135.16B	161.38B	153.85B	124.65B	110.73B	76.67B
Stockholders Equity	484.62B	492.36B	406.37B	347.80B	293.54B	252.14B
Cash Flow
Free Cash Flow	0.00	52.41B	81.31B	67.58B	40.08B	35.68B
Operating Cash Flow	0.00	120.36B	97.52B	81.78B	83.65B	56.71B
Investing Cash Flow	0.00	-68.00B	-16.40B	-13.08B	-43.59B	-13.11B
Financing Cash Flow	0.00	-38.15B	-30.94B	-32.09B	-27.19B	-15.82B

Disco Technical Analysis

• Technical Analysis Sentiment: Positive
• Last Price: 75500.00
• 50DMA: Positive
• 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:6146, the sentiment is Positive. The current price of 75500 is above the 20-day moving average (MA) of 72269.00, above the 50-day MA of 62819.20, and above the 200-day MA of 48017.91, indicating a bullish trend. The MACD of 3930.92 indicates Positive momentum. The RSI at 60.30 is Neutral, neither overbought nor oversold. The STOCH value of 75.67 is Neutral, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Positive sentiment for JP:6146.

Disco Peers Comparison

Name	Overall Rating	Market Cap	P/E Ratio	ROE	Dividend Yield	Revenue Growth	EPS Growth
6920	81 Outperform	¥3.09T	34.81	53.12%	1.11%	32.51%	57.19%
7735	78 Outperform	¥2.03T	25.76	21.73%	2.29%	11.29%	11.38%
7729	77 Outperform	¥708.57B	32.37	12.66%	2.28%	9.53%	-11.17%
6146	75 Outperform	¥8.12T	62.35	25.78%	0.79%	13.45%	20.37%
8035	73 Outperform	¥19.94T	40.09	27.73%	1.79%	16.74%	16.03%
6525	62 Neutral	¥1.51T	45.94	―	0.73%	10.98%	6.51%
Sector *	61 Neutral	$37.18B	12.37	-10.20%	1.83%	8.50%	-7.62%

Disco Corporate Events

Disco Revamps Executive Stock Option Terms to Eliminate Fractional Shares

Disco Corporation has amended the terms for stock options previously granted to its executive officers, revising how the number of shares underlying those options is adjusted in the event of a share split or share consolidation. The change is designed to clarify the stock option terms, eliminate the creation of fractional shares, and streamline administration of the program.

Under the new rules, the number of shares tied to unexercised options will be recalculated using a simplified formula based on the post-split or post-consolidation allocation per common share, with any fractional shares rounded down. The company said the impact on stock dilution will be minimal, with numerical adjustments stemming only from rounding, and disclosed that certain existing option series will see their underlying share count per option increase slightly from 299 to 300.

The amendment applies retroactively to all unexercised stock options as of February 17, 2026, even if the relevant share split or consolidation occurred earlier. Disco emphasized that the validity of options already exercised remains unaffected, signaling a housekeeping move aimed at operational efficiency rather than a strategic shift in its equity compensation policy.

The most recent analyst rating on (JP:6146) stock is a Buy with a Yen84384.00 price target. To see the full list of analyst forecasts on Disco stock, see the JP:6146 Stock Forecast page.

Disco Reveals FY2026 Outlook and Confirms Performance-Linked Dividend Policy

Disco Corporation has decided to disclose its previously undisclosed business and dividend forecasts for the fiscal year ending March 31, 2026, setting a cumulative shipment forecast of ¥438.0 billion amid highly volatile demand in the semiconductor and electronic components markets. The company will continue its performance-linked dividend policy targeting a 25% payout ratio on consolidated half-year net income, with a minimum stable dividend of ¥20 per year and potential additional dividends drawn from surplus cash after funding requirements, while cautioning that actual results and dividend payments may differ significantly from forecasts due to business performance fluctuations and investment needs.

The most recent analyst rating on (JP:6146) stock is a Buy with a Yen67266.00 price target. To see the full list of analyst forecasts on Disco stock, see the JP:6146 Stock Forecast page.

Disco Posts Higher Nine-Month Earnings and Lifts FY2025 Forecasts, Dividend

Disco Corporation reported solid growth for the first nine months of fiscal 2025, with net sales rising to ¥303.8 billion and net income increasing to ¥92.6 billion, contributing to a 10.9% gain in comprehensive income and a strengthening equity ratio to 79.8%. The company also raised its full-year earnings and dividend forecasts for fiscal 2025, now targeting ¥419.0 billion in net sales and ¥126.4 billion in net income alongside a higher annual dividend of ¥437 per share, signaling confidence in sustained demand and reinforcing its capital returns to shareholders despite only moderate profit growth expectations.

The most recent analyst rating on (JP:6146) stock is a Buy with a Yen67266.00 price target. To see the full list of analyst forecasts on Disco stock, see the JP:6146 Stock Forecast page.

Disco Exceeds Nine-Month Sales Forecast as AI-Driven Equipment and Tool Demand Lifts Shipments

Disco Corporation reported non-consolidated net sales of ¥248.9 billion for the first three quarters of fiscal 2025, exceeding its latest full-period forecast for the April–December period, with third-quarter net sales rising 13.8% year-on-year to ¥88.0 billion. Non-consolidated net shipments for the third quarter were ¥90.1 billion, essentially flat year-on-year but up 16.3% quarter-on-quarter, driven by strong demand for precision processing equipment related to generative AI applications and record-high quarterly shipments of precision processing tools, reflecting continued high customer facility utilization and suggesting robust underlying demand despite some shipment volatility earlier in the year.

The most recent analyst rating on (JP:6146) stock is a Buy with a Yen53003.00 price target. To see the full list of analyst forecasts on Disco stock, see the JP:6146 Stock Forecast page.